Morgan Stanley lowers Apple’s target price: Mid-term revenue and profit growth will slow down, macro headwinds still exist

According to Zhitong Finance APP, JP Morgan maintains an "overweight" rating on Apple (AAPL.US) but has lowered its target price for the stock from $240 to $230, citing a slowdown in mid-term revenue and profit growth, as well as adverse macroeconomic factors.

Analysts from Morgan Stanley, led by Samik Chatterjee, stated that they have updated their revenue and profit forecasts for Apple to reflect the impact of consumers' early release of demand for iPhones in the short term, which will lead to a weakening of demand drivers in the second half of this year, especially against the backdrop of only minor upgrades expected for the iPhone 17 series.

The analysts added that due to ongoing macroeconomic uncertainty, as well as the early release of demand brought about by the previous rush to purchase ahead of anticipated tariff increases and smartphone subsidies in China supporting consumer spending, they are lowering their demand expectations for the iPhone 17 series. They noted that their more pessimistic outlook for the sales prospects of the iPhone 17 series contrasts with their more optimistic expectations for the iPhone 18 cycle—where the iPhone 18 series is expected to launch foldable phones and make further progress in the long-awaited but yet-to-be-seen AI features.

The analysts indicated that this adjustment means they expect only moderate single-digit percentage growth in Apple's revenue for the fiscal year 2026, with stronger revenue growth momentum expected in fiscal year 2027. This will form the basis of the investment logic for investors looking to participate in the upside potential brought by the adoption of AI edge features.

In addition to demand drivers, the analysts also expect that Apple's faster transition of its iPhone assembly supply chain to India to serve the U.S. market may alleviate initial investor concerns about gross margin pressure. However, they also anticipate that tariff pressures will prompt the company to raise prices, which will limit the sales growth momentum of the upcoming iPhone 17 series.

The analysts pointed out that in addition to lowering profit forecasts, they have also slightly reduced the valuation multiples from current trading levels to reflect the potential downside risks to mid-term profit expectations. They stated that despite this, recent demand drivers remain strong, partly due to smartphone subsidies in China, which also positions Apple to deliver strong financial results in the third quarter of fiscal year 2025