Morgan Stanley sees a 46% growth driver for Apple stock. Why is he already waiting for the iPhone 18?

Morgan Stanley has raised its target price for the iPhone maker's shares, expecting them to rise by 16%. But the bank admits that the stock could rise as much as 46% if the release of the iPhone 18 line next year spurs demand for foldable smartphones and long-awaited AI features, such as the smarter Siri voice assistant.

A group of Morgan Stanley analysts led by research director Eric Woodring are optimistic about Apple's prospects, MarketWatch writes. They raised their target price on the company's shares to $298, up 16% from Thursday's closing price.

After a poor start to the year, Apple shares began to recover, and now, amid sustained interest in the iPhone 17, analysts see upside potential in 2026. In an optimistic scenario, according to Morgan Stanley, Apple's securities next year could rise by 46% to $376. To do this, the company needs to release a foldable iPhone and introduce full-fledged AI functions into the iPhone 18 lineup.

According to Woodring, the base model iPhone 17 released in September was a "compelling upgrade option" for owners of older devices: it is feature-rich while remaining relatively affordable. The increased timing of delivery of this model to consumers indicates strong demand. Morgan Stanley analysts suggest that initial order volumes are higher than last year's flagship. However, they note that the current share price already reflects a strong start to iPhone 17 sales.

To continue growing, the market needs to see more than that, Woodring believes. In the current baseline scenario, he pledges that Apple will ship 243 million iPhones in fiscal 2026. However, Morgan Stanley acknowledges that this is a conservative estimate, given signs of a shorter upgrade cycle.

What could really put Apple on a new growth spiral is the iPhone 18. Next year, according to Morgan Stanley, Apple could introduce six new models, including a foldable iPhone. That has the potential to push iPhone revenue growth in the high single-digit percentages in 2027, even without taking into account the effect of AI features.

In an optimistic scenario, the company will have to ship 270 million iPhones and show earnings per share above $10 in fiscal 2027. According to Morgan Stanley, this result is "achievable if foldable devices and AI generate even more demand than the base model," MarketWatch quoted the bank's report as saying.

According to analysts, the market will start to put this potential into quotations more actively already at the beginning of the next year.

In trading on September 2, shares of the iPhone maker rose 0.7% to $257.1. Since the beginning of the year, the stock has added only 2.7% to its value, while the broad market index S&P 500 rose by 14%. Over the past three months, however, Apple's capitalization has risen 20%.

This article was AI-translated and verified by a human editor