On Friday, Goldman Sachs maintained its Buy rating and $275.00 price target on Apple shares (NASDAQ:). The stance follows the announcement that Epic Games Store has launched on iOS in the European Union.

This move is in response to changes to Apple’s App Store platform that had to be brought into line with the EU’s Digital Markets Act (DMA), effective January 26, 2024. The Epic Games Store’s debut on iOS is currently limited to the EU region, but it has also been launched globally on Android devices.

The Epic Games Store has launched with three apps: Fortnite, Fall Guys and Rocket League Sideswipe. In the future, the offering will be expanded by integrating external app developers. This launch marks the first significant alternative app marketplace for iOS, albeit limited to the EU. Goldman Sachs believes that this development will have minimal impact on Apple’s business, given the potential risks and adoption rates.

The analysis suggests that the existence of alternative app marketplaces such as Epic Games Store in the EU could pose a risk to the Apple App Store of losing market share. However, the lack of differentiation of these alternative marketplaces is expected to slow their adoption among developers and consumers.

It may not be financially feasible for developers to distribute their apps on the Epic Games Store because Apple charges a Core Technology Fee of €0.50 per first annual install. This fee structure is particularly challenging for ad-supported apps, which currently do not incur platform fees.

From a consumer perspective, while exclusive games like Fortnite could drive downloads on the Epic Games Store, such exclusives are viewed as a small part of the broader app economy. The lack of additional exclusive content from third-party developers could continue to hinder adoption of the Epic Games Store.

In other recent news, TikTok is suing the U.S. Department of Justice over a forced sale, claiming that its user data and content recommendation algorithm are securely stored on U.S.-based Oracle’s (NYSE:) cloud servers.

Meanwhile, Spotify (NYSE:) has updated its EU application on Apple devices to display the prices of various subscription plans and services after Apple initially rejected this request three months ago.

In financial news, South Korean retail investors continue to favor U.S. stocks over their home market, with strong preferences for tech giants such as Nvidia (NASDAQ:), Tesla (NASDAQ:) and Apple. Apple is also the market leader in AI PCs, holding a 60% market share with its Mac lineup, which includes M-series chips for AI tasks.

In response to criticism from the European Commission, Apple has revised its App Store policies within the EU, allowing app developers to communicate with customers outside of their apps. These recent developments reflect the dynamic nature of the technology industry and its ongoing interface with legal, financial and regulatory frameworks.

InvestingPro Insights

With Goldman Sachs remaining bullish on Apple with a price target of $275.00, recent data from InvestingPro shows that Apple’s market cap stands at a robust $3,430.0 billion, reflecting its significant presence in the market. The company’s trailing twelve months to Q3 2024 P/E ratio is 33.76, which could indicate a higher valuation compared to the broader market. This is also evidenced by Apple’s price-to-book ratio of 51.6, which suggests a high valuation level relative to the company’s book value.

Despite the potential challenges posed by the Epic Games Store’s entry into the EU market, Apple appears to be in a solid financial position. The company has recorded a 0.43% revenue growth over the last twelve months through Q3 2024. This is coupled with a respectable gross profit margin of 45.96%, which underscores the company’s ability to retain a significant portion of its revenue as profit. In addition, Apple’s return on capital is an impressive 30.59%, reflecting efficient management of its assets to generate profits.

For investors seeking further insight, InvestingPro offers additional tips such as Apple’s consistent dividend growth, with the company increasing its dividend for 12 consecutive years. Additionally, 21 analysts have upgraded their earnings forecasts for the coming period, indicating potential optimism about Apple’s future financial performance. To explore these insights in more detail, Apple investors and enthusiasts can access a wealth of additional InvestingPro tips at https://www.investing.com/pro/AAPL.

This article was created with the help of AI and reviewed by an editor. For more information, see our Terms and Conditions.