Morgan Stanley Reaffirms “Buy” Rating on Apple

Morgan Stanley analyst Erik Woodring recently reiterated his “buy” rating on Apple and maintained his $273 price target. Woodring emphasized that although Apple's stock price may be volatile in the short term, even falling to near $200, this would be an excellent “buy” opportunity. “Buy” opportunity, because AI technology will eventually trigger Apple's upgrade cycle for several years, driving global demand for the device.

iPhone delivery times have limited correlation to short-term demand

Woodring analyzed the iPhone delivery time, pointing out that historical data shows that the iPhone delivery time in the first two weeks after the launch can effectively predict the trend of shipments in the next 12 months. However, he also emphasized that this does not accurately predict the short-term (fourth quarter) production revisions, nor can it predict the total iPhone shipment situation. For investors, the real need to focus on is the next 10 days iPhone 16 delivery time, which is an important indicator to determine the future demand trend.

AI technology will give rise to an upgrade cycle

Morgan Stanley emphasized that with the rapid development of AI technology, Apple will usher in a multi-year upgrade cycle. Woodring pointed out that Apple's “Apple Intelligence” feature will be the catalyst for a multi-year upgrade wave, and the next two years, iPhone shipments are expected to be close to 500 million, higher than the 2021-2022 record iPhone shipments. In the next two years, iPhone shipments are expected to approach 500 million units, up from the record number set in 2021-2022. He believes that AI will not only improve device performance, but also drive strong consumer demand for new products.

Optimistic market forecast

Wedbush Securities analyst Dan Ives is equally bullish on Apple's long-term outlook, raising his price target from $285 to $300 and predicting that Apple's market capitalization will surpass $4 trillion by 2025.Ives further noted that Apple's iPhone 16 is likely to be its most successful model ever, with sales growth over the next 12-18 months projected to reach high single-digit growth.

There are currently around 300 million iPhones worldwide that have not been upgraded in over four years, and this pent-up demand will eventually be released as a major driver of iPhone 16 sales.Ives predicts that by 2025, iPhone 16 sales will reach 240 million units.

AI and consumer experience become Apple's competitive advantage

In addition to the upgrade of hardware devices, Apple's AI application strategy is also highly anticipated by the market. Christian Frank, head of technology at S&P Global Ratings, said that Apple's ability to enhance the customer experience is very strong, and it is expected that the company will dig out more AI application scenarios that can enhance the consumer's experience of using AI technology. These applications will not only enhance consumer stickiness, but will also further enhance Apple's competitiveness in the market and drive benefits at the corporate level.