Services slowdown pushes Morgan Stanley’s AAPL target down to $360
AI-summarised brief · reviewed before publication
Morgan Stanley reduced its Apple price target from $364 to $360, citing decelerating Services growth and elevated memory costs that have dampened the earnings outlook. Despite maintaining an Overweight rating, analyst Erik Woodring noted that two of three key stock drivers—Services and gross margins—are facing headwinds. Consequently, the firm lowered its fiscal 2027 earnings estimate from $10.39 to $10 per share. This adjustment comes after Apple reported robust fiscal third-quarter revenue of $109.4 billion, a 16% year-over-year increase. iPhone revenue hit a June-quarter record of $54.3 billion, while Mac revenue surged 29%. Although product demand remains strong, the investment bank identified weakening Services performance and margin pressure as critical factors undermining previous growth expectations, necessitating a more conservative valuation despite the company’s overall financial strength.
💡 Why It Matters
- · The downgrade isolates Services as a specific vulnerability, suggesting that high-margin software revenue may no longer reliably offset hardware cost inflation.
- · Investors must now scrutinize whether Apple’s ecosystem loyalty can sustain premium pricing when underlying operational efficiency declines.
