Needham Warns Meta’s AI Agent Could Cost Apple Up to $10 Billion
Investment firm Needham has warned that Meta’s growing AI-agent business could put as much as $10 billion of Apple’s annual revenue at risk by bypassing the App Store and changing how consumers interact with digital services.
Needham has raised concerns that Meta’s new Muse AI agent could eventually challenge Apple’s highly profitable App Store business. Analyst Laura Martin estimates that Apple could lose as much as $10 billion in annual revenue if a significant portion of App Store transactions moves to Meta’s Muse Connectors, which is designed to allow users to complete transactions through an AI agent without relying on Apple’s traditional payment infrastructure.
The estimate is based on a scenario in which around 20% of App Store sales migrate to Meta’s platform. Needham estimates that roughly 40% of Apple’s projected $123 billion in fiscal 2026 services revenue comes from the App Store. If a fifth of that business were redirected through an alternative AI-agent platform, Apple could potentially lose around $10 billion in revenue, while its earnings before interest, taxes, depreciation and amortisation could fall by approximately $7.5 billion.
The concern reflects a broader shift in the way consumers may interact with digital services. Instead of opening individual applications, searching for products and completing transactions inside them, AI agents could increasingly perform these tasks on behalf of users. Meta has already attracted significant developer interest in Muse Connectors, with more than 1,500 developers reportedly applying within the first 168 hours after its launch. Needham believes this could eventually put pressure on Apple to offer more attractive economics to developers.
The potential threat extends beyond the App Store itself. Bank of America analyst Tal Liani has warned that AI agents capable of reviewing subscriptions could make it easier for consumers and businesses to identify and cancel software services they rarely use. That could increase subscription churn across the technology industry. Analysts nevertheless acknowledge that it remains uncertain how quickly AI agents such as Muse will gain enough adoption to materially affect Apple’s revenue.
For Apple, the development adds another challenge as the company attempts to strengthen its position in the AI era. Needham has maintained a Hold rating on Apple and identified the possibility of an AI-first competitor combining software agents, hardware and monetisation as a significant long-term risk to the company’s ecosystem. Apple is also developing its own AI capabilities, including a more advanced Siri, as it seeks to ensure that AI agents do not weaken the role of the iPhone and App Store in its ecosystem.
