Morgan Stanley rethinks Apple stock ahead of earnings

Apple (AAPL) shares dropped 2.5% connected April 21 aft it revealed its biggest quality for galore years. Its existent CEO, Tim Cook, volition measurement down from the presumption and beryllium replaced by John Ternus, the firm’s elder vice president of hardware engineering.

Next week, the iPhone shaper volition study its fiscal second-quarter net connected April 30. This is 1 of the fewer net near with Cook nether the CEO presumption earlier helium leaves connected September 1.

Leadership alteration is usually handled cautiously due to the fact that it tin interest investors. The timing of this announcement hints that Apple whitethorn person affirmative quality to offer.

“My gut tells maine this was announced earlier net truthful we tin absorption connected a large 4th with beardown fundamentals adjacent week erstwhile Apple reports,” Melius's caput of exertion probe Ben Reitzes wrote successful a probe note, CNBC reported. “Cook was CEO a agelong clip and apt wants to permission connected a precocious note.”

In the upcoming earnings, Investors are weighing dependable request crossed iPhone and different devices against rising outgo pressures, particularly successful representation components, which could compression margins successful the adjacent term.

In January, Apple reported excessively beardown income of the iPhone, peculiarly successful China. Revenue from iPhone surged 23% twelvemonth implicit twelvemonth to $85.27 billion, driven by beardown income of the iPhone 17 models. iPhone income relationship for astir 60% of Apple's full revenue.

In the January net call, CEO Cook acknowledged that the rising spot prices volition person a "bit much of an impact" connected the company's Q2  gross margin. Still, Apple forecast a gross borderline of 48% to 49%.

Morgan Stanley is revisiting Apple banal up of earnings. Here’s what the steadfast sees.

Morgan Stanley reiterated its $315 terms people with an overweight standing connected Apple, arguing that the iPhone shaper is "a tactical agelong into earnings" and the near-term borderline unit is already good understood by investors.

“Memory ostentation volition unit margins, but this is good known,” the analysts wrote successful an April 20 probe study sent to TheStreet. "We expect gross borderline downside to beryllium much than offset by gross upside successful the June 4th guide, making for better-than-feared earnings."

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Still, Morgan Stanley expects Apple’s June 4th (fiscal Q3) gross borderline to travel successful beneath consensus, "given concerns astir representation terms inflation."

Beyond that, the steadfast besides sees risks from weaker request if higher iPhone prices oregon macro conditions measurement connected consumers, arsenic good arsenic imaginable volatility tied to the staggered iPhone motorboat schedule, which could impact gross and borderline timing.

On the gross side, Morgan Stanley sees continued spot successful Apple’s halfway business, the iPhone.

"We proceed to spot beardown iPhone merchantability done successful March, above-seasonal builds successful June, and a importantly above-Consensus CY26 iPhone physique forecast from the proviso chain," the analysts said.

Morgan Stanley said beardown iPhone sales, on with upside successful Mac and services, are driving the steadfast to modestly rise its March and June 4th gross forecasts to astir 1% to 5% supra statement estimates.

Beyond the quarter, attraction turns to catalysts.

Morgan Stanley said 2 catalysts could marque the upcoming net a “clearing event” and thrust stronger show for Apple.

The archetypal is Apple's June Worldwide Developers Conference, wherever expectations are low, but that could enactment successful Apple’s favor. The steadfast highlighted that “a meaningful Siri redesign could beryllium a meaningful sentiment tailwind.”

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The 2nd is the September iPhone launch. Morgan Stanley expects “a caller iPhone motorboat this autumn that brings genuine caller merchandise excitement,” which could assistance thrust renewed capitalist interest.

The slope besides pointed to Apple’s currency level arsenic a enactment factor, noting its “robust FCF procreation stands retired positively," portion different mega-cap tech companies are ramping up spending connected AI infrastructure.

Regarding Apple's CEO change, Morgan Stanley said it is "unlikely to change Apple’s halfway strategy/vision crossed hardware, services, software, superior returns, oregon vertical integration.

"With a CEO transition, we tin envision immoderate renewed capitalist optimism," the analysts wrote successful different probe enactment wherever they did not alteration their $315 terms people for Apple. "Fundamentals are solid."

Apple banal closed astatine $266.17 connected April 21 and is down 2.1% twelvemonth to date.

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This communicative was primitively published by TheStreet connected Apr 22, 2026, wherever it archetypal appeared successful the Investing section. Add TheStreet arsenic a Preferred Source by clicking here.