Morgan Stanley has raised its price target on Apple (AAPL), citing the company’s strong pricing power and growing opportunities tied to artificial intelligence as key drivers of further upside.
In a note to clients, the investment bank said Apple remains uniquely positioned to monetise AI at scale, not through speculative products but through its vast installed base of more than two billion active devices. According to the analysts, Apple’s ability to integrate AI features directly into its ecosystem, spanning iPhone, iPad, Mac, and services, gives it an edge over competitors that rely more heavily on standalone AI offerings.
The bank highlighted Apple’s pricing power as a major strength, noting that the company has consistently demonstrated an ability to pass higher costs onto consumers without materially hurting demand. This dynamic is expected to persist as Apple introduces more AI-enabled features that can justify premium pricing across hardware and subscription services.
Morgan Stanley also pointed to Apple’s services segment as a long-term growth engine. AI-driven enhancements to services such as iCloud, Apple Music, Apple TV+, and the App Store could support higher average revenue per user and improve margins over time. Services already account for a growing share of Apple’s overall revenue and are seen as more resilient during periods of macroeconomic uncertainty.
On the AI front, the analysts said Apple’s strategy of focusing on on-device intelligence and privacy-centric AI could resonate strongly with consumers and regulators alike. Rather than relying entirely on cloud-based models, Apple is expected to leverage its custom silicon to deliver AI capabilities directly on devices, improving performance while reinforcing its privacy narrative.
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The revised target reflects confidence that Apple can sustain earnings growth even in a maturing smartphone market, supported by ecosystem lock-in, recurring services revenue, and gradual AI monetisation. Morgan Stanley reiterated that Apple remains one of its top large-cap technology picks, viewing the stock as a defensive growth play with long-term optionality from AI.
