Morgan Stanley has issued a bullish prediction for Apple’s stock performance, citing the potential for a significant iPhone price increase in September. The investment bank believes that a $200 price hike could boost Apple’s earnings per share by 2-4% in the fiscal third quarter of 2026, while adding around 1% to fiscal 2027 EPS forecasts.
In a research note, Morgan Stanley analysts led by Erik Woodring emphasized the market’s growing focus on the impact of price hikes on Apple’s fundamentals. They argue that Apple customers have consistently demonstrated a willingness to absorb price increases, particularly when it comes to flagship hardware products.
The analysts pointed out that Apple’s core product demand has been somewhat inelastic, with the iPhone being the most inelastic product within Apple’s product ecosystem, followed by Mac and then iPad. This is especially important because the iPhone is both Apple’s highest-value product and the device consumers replace most frequently.
A $200 increase could provide a meaningful boost to margins with only limited impact on demand, according to Morgan Stanley. The bank also highlighted current industry conditions as another reason Apple may be able to implement higher prices without significantly affecting sales.
Recent price increases are unlikely to materially disrupt demand, especially considering supply challenges at peers, Morgan Stanley noted. The bank added that checks across Apple’s supply chain continue to indicate stable production plans, with iPhone build plans remaining largely unchanged in the last several weeks.
Outside the iPhone business, Morgan Stanley observed that there have been no meaningful changes in Mac or iPad lead times following recent price increases. This is viewed as evidence that Apple is successfully protecting profitability despite higher component costs.
Morgan Stanley identified three major events that could influence investor sentiment over the coming months. These include Apple’s June-quarter earnings results and guidance for the September quarter, the expected launch of the iPhone 18 Pro, iPhone 18 Pro Max, and Apple’s first foldable iPhone, as well as the public beta release of an upgraded Siri AI platform.
The combination of these developments could prompt investors to reassess Apple’s earnings potential over the near term, according to Morgan Stanley. The bank expects the introduction of Apple’s first foldable device, the next-generation iPhone Air 2, and the anticipated 20th anniversary iPhone lineup to support healthy iPhone demand through FY27 and FY28.
Morgan Stanley also continues to view artificial intelligence as an important long-term growth driver. The firm sees a longer-term path toward an AI-driven replacement cycle as Apple Intelligence and Siri AI functionality steadily improves.
