Morgan Stanley analysts said Apple's third-quarter results are expected to be strong and exceed Wall Street expectations. Apple willJuly 31When the third-quarter financial report is released, the outside world will have the opportunity to understand the company's performance under changes in tariff policies. If Morgan Stanley's forecast is correct, Apple will fare quite well amid the import woes.
Morgan Stanley said in an investor note that it expects healthy growth across Apple's product categories, in part due to the additional boost from currency factors. In terms of revenue, Apple's year-over-year revenue growth is likely to be 5.8%.
For iPhone, the company has raised its forecast to 2% above consensus estimates due to higher shipments and higher average selling prices (ASPs). iPad and Mac also felt the same demand-based benefits, growing 9% and 1% respectively. For the full June quarter, revenue is expected to hit $90.7 billion.
The lack of guidance for its services business during Apple's second-quarter analyst call clearly poses a problem for investors. They believe this, along with the App Store ban issued on April 30, could be a drag on second-quarter growth. Morgan Stanley said it does not believe Apple will be a drag on the services business and has raised its year-on-year growth forecast to 11.6%.
For the App Store alone, Morgan Stanley also predicts a year-on-year growth of 11.6%. As for the growth rate of the services business, analysts believe this may be the eighth consecutive quarter of growth of 10% to 15%.
Analysts believe growth is expected to "bottom out" in the September quarter, but should still remain positive. Revenue forecast for the quarter was raised to $96.5 billion from the previous forecast of $95.7 billion, and earnings per share were also adjusted from $1.56 to a new forecast value of $1.61.
This was due to a modest rise in the U.S. dollar, higher Mac and iPad sales, and better services revenue growth. The gross margin forecast has been updated to 46.1% from 45.3%, including $1.5 billion in tariff costs.
Speaking of Apple's artificial intelligence efforts, Morgan Stanley warned not to expect any meaningful updates to Apple Intelligence or Apple AI this quarter.
Analysts believe investors don't appreciate Apple's artificial intelligence work, in part because of comparisons with the work of Google, Meta and Amazon.
While Morgan Stanley acknowledges that Apple may not have fully finalized its artificial intelligence strategy, analysts also believe that any idea that Apple will acquire an artificial intelligence search engine is "misleading." Regardless of the DOJ's battle with Google, Apple doesn't want to compete in search.
Instead, Apple is thought to be creating a platform with similar virtual assistant capabilities. The platform combines self-developed LLM technology based on Siri, as well as other technologies using white-label technology from third-party companies.
Morgan Stanley added that it does not expect any updates to the Apple Intelligence timeline beyond 2026, nor any updates on progress in the China market.
Overall, Morgan Stanley rates Apple an "overweight" rating and maintains a $235 price target.