Morgan Stanley Boosts Apple (AAPL) Target, Sees Upside From Pricing Power and AI

Core Viewpoint - Apple Inc. is recognized as a significant player in the AI stock market, with Morgan Stanley raising its price target to $315 from $305 while maintaining an Overweight rating [1]. Financial Projections - The new price target of $315 reflects a 32x multiple on the revised FY27 EPS of $9.83, which is an increase from the previous estimate of $9.55 [2]. - The 3% upward revision in FY27 EPS is attributed to a 130 basis points decrease in gross margin due to higher memory input costs, a 5% increase in revenue from price hikes, and a slightly higher iPhone shipment forecast [3]. Revenue and Cost Dynamics - Revenue expectations have been raised due to price hikes driven by commodity cost inflation, alongside a forecasted elongation of the iPhone replacement cycle by 0.1 years [3]. - Operating expenses are expected to remain largely unchanged but elevated compared to historical seasonality due to increased investments in AI [3]. Market Confidence - The firm expresses confidence in Apple's pricing power and the potential payoff from its investments in AI [2].