Apple is once again in the spotlight for analysts at the end of 2025. While many investment firms are reviewing and adjusting their recommendations, Morgan Stanley is particularly optimistic. The US bank has raised its price target for Apple stock and sees strong growth prospects beyond the coming year. Key factors include iPhone sales, the service business, the supply chain, and managing rising costs for storage and AI infrastructure.
Morgan Stanley remains among the most ardent Apple supporters on Wall Street. In a recent note to investors, the research firm not only raised its price target but also reiterated its overweight rating on the stock. The focus is primarily on 2026, which the analysts believe could be an exceptionally strong year for Apple.
New price target and financial expectations
Morgan Stanley has raised its price target for Apple from $305 to $315. The last adjustment was made on October 31, demonstrating how quickly the assessment has evolved in favor of Apple. The new price target is based on an unchanged valuation multiple of 32 on the expectations for fiscal year 2027.
Morgan Stanley now expects earnings per share of $9.83 for this year, up from its previous estimate of $9.55. The increase stems from higher revenue expectations, even though a slightly lower gross margin is also anticipated.
Revenue growth, margins and price pressure
The expected revenue increase is around five percent. Drivers include price increases resulting from inflation in raw material costs, as well as slightly higher forecasts for iPhone shipments. These are offset by rising costs, particularly in the storage sector.
Morgan Stanley expects that higher prices for RAM and other storage solutions will put pressure on Apple's gross margin. This cost trend poses challenges not only for Apple, but for many companies.
Storage, cloud and artificial intelligence
Despite rising infrastructure costs, Morgan Stanley believes demand for Apple's cloud services remains stable. At the same time, the analysts express doubts that Apple Intelligence will be sufficient in the short term to fully offset the strong price pressure on storage.
The expansion of artificial intelligence infrastructure is unlikely to keep pace with sharply rising storage prices. While AI developments are generally viewed positively, Morgan Stanley does not currently expect any real monetization measures in the field of artificial intelligence. Concrete benefits for products or services are not foreseeable in the short term.
iPhone sales, iPhone 17 and upgrade cycles
A key factor in the positive outlook remains the iPhone business. According to Morgan Stanley, the iPhone 17 in particular benefits from an extended replacement cycle of around five years. This is further supported by functional upgrades, improved subsidies from mobile carriers, and more attractive trade-in offers.
These factors have helped keep sales figures stable and led to a slight increase in iPhone shipment forecasts. Morgan Stanley expects Apple to end fiscal year 2026 with approximately 550 million iPhones in the market that are not suitable for Apple Intelligence.
Expectations for a new Siri version, as well as the potential support for third-party LLM providers, could lead to many users further delaying their device upgrades, and these effects could be spread out over a longer period.
Supply chain and operating costs
Another advantage is the supply chain. Apple utilizes it more efficiently than many other companies and benefits from lower expectations regarding potential tariffs in China. Planned price increases for iPhones also contribute to the positive overall assessment.
Despite substantial investments in AI, operating expenses remain largely stable. Historical seasonal effects play virtually no role, indicating strong cost control.
Services as a long-term growth driver
Morgan Stanley expects Apple's services business to remain a key growth driver, anticipating continued double-digit revenue growth in this segment. This is driven by price increases and structural improvements to the App Store.
This further increases the importance of the service sector and stabilizes Apple's revenue structure in addition to the hardware business.
Morgan Stanley sees more opportunities than risks at Apple
Morgan Stanley maintains its overweight rating on Apple. The risk-adjusted risk-reward ratio is 14 percent, and the bull-to-bear skew is 1.6. Despite rising storage prices and a lack of short-term AI monetization, the research firm sees significantly more opportunities than risks. From Morgan Stanley's perspective, Apple thus remains one of the most attractive companies looking ahead to 2026 and beyond. (Image: Nicolas_Raido / DepositPhotos.com)
Disclaimer: No recommendation for investments
This article does not constitute financial or investment advice. The information contained herein is for journalistic and informational purposes only. Please conduct your own research or consult a financial advisor before making any investment decisions.
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