Morgan Stanley raises Apple target, cites strong iPhone 17 sales
Morgan Stanley is out with a big upgrade to its Apple stock prediction, citing modestly stronger than expected sales, but adding that as thoughts turn to the next 12-months of iPhone the firm is becoming more excited, as they believe the foldable iPhone and other upcoming models will boost take up.
“Build increase imminent”
“While the supply chain has yet to officially adjust iPhone builds, we’re raising our FY26 iPhone revenue by 4% — 3% higher units and 1% higher ASPs — as our checks suggest a build increase is imminent, driven by demand strength from the iPhone 17 base, Pro and Pro Max models,” the analysts said.
The analysts cite several additional insights, particularly:
- For FY27, we now believe a path to over 250m iPhone shipments is likely given improving upgrade rates and the first foldable iPhone launch in fall 2026.
- Our FY26/FY27 EPS estimates move 2-6% higher, we roll valuation from CY26 to FY27, and our target multiple increases from 29x to 32x – resulting in new $298 PT.
- Our new $376 bull case valuation embeds over 270m iPhone shipments and $10.16 of EPS, which is achievable if Foldables and AI catalyse even stronger demand.
In the event Apple has a standout success with the folding iPhone, that last prediction could be of huge significance to the company’s’ business outcomes across the coming 12 months.
A place for Apple Intelligence
There are challenges, of course. Apple’s relationships in China and approval, if any, for Apple Intelligence and/or eSIM in China will make a material difference to the company’s business.
Apple Intelligence meanwhile relies very much on a successful spring launch of an upgraded Siri system. If Apple gets this right then iPhone replacement cycles could accelerate, which is of particular importance when just 20% of iPhones can run Apple Intelligence at this point.
Flop, or Fold…
Looking further ahead, the analysts observe that by the end of the iPhone 17 cycle only c.30% of iPhones will run Apple Intelligence, leaving around a billion devices in need of an upgrade.
If Apple gets next year’s iPhone releases right and supports these with success in Apple Intelligence, then it may nurture record replacement rates – and all this market activity will stimulate demand for other Apple products and likely accelerate demand for services.
Bookmark this one and let’s return to it next year to see how these predictions look.
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