iPhone 17 sales are booming, Morgan Stanley is even more optimistic: there are still 1 billion old devices in stock, and iPhone 18 will be even stronger.

iPhone 17 sales are booming, Morgan Stanley is even more optimistic: there are still 1 billion old devices in stock, and iPhone 18 will be even stronger.

Morgan Stanley presents a more optimistic outlook for Apple in its latest report. Although the start of the current iPhone 17 cycle has exceeded expectations, an even stronger iPhone 18 cycle driven by installed device upgrades and major product innovation is brewing.

According to trading desk sources, Morgan Stanley analyst Erik W Woodring stated in the report that the early demand signals for iPhone 17, especially the strong performance of the base and Pro models, have prompted the bank to raise its financial forecast for Apple’s FY2026. Supply chain surveys indicate that due to robust demand, Apple is about to increase its production orders for the iPhone 17.

On this basis, Morgan Stanley has sharply raised its price target for Apple from $240 to $298. However, the analyst also cautions that the recent stock price rally may have already priced in the market’s optimism for the iPhone 17 cycle, and future stock outperformance will require further upward revisions to earnings forecasts.

The bank believes that the key driver of Apple’s long-term growth lies in the next product cycle. The report predicts that around 1 billion old iPhones will enter an upgrade window at that time, together with the launch of Apple’s first foldable phone, described as "the most innovative new device in years," both are expected to drive continuous revenue growth for Apple in FY2027.

iPhone 17 Starts Stronger Than Expected

Morgan Stanley points out that the initial demand momentum of the iPhone 17 cycle is much stronger than they anticipated. This conclusion is based on two key data points:

First, shipping wait times have significantly increased. Data as of September 30 shows that wait times for most models and regions of the iPhone 17 series are longer year-on-year (Y/Y). Notably, the base iPhone 17, seen as the top choice for existing users upgrading, has had its wait time continue to extend, and in the Chinese market, it’s nearly a month longer than at the same time last year.

Second, and more importantly, Morgan Stanley’s supply chain survey shows that production orders for iPhone 17 are "imminent." Although official output has not yet been raised, communications with multiple exclusive suppliers indicate that the 2025 second-half production plan for the iPhone 17 series may be increased from the current 84-86 million units to over 90 million units. The demand surge is focused on the base, Pro, and Pro Max models of the iPhone 17.

Based on these strong early signals, Morgan Stanley has decided to raise its FY2026 forecast for Apple, increasing the expected iPhone shipments by 7.5 million units to 243 million units (up 3.3% YoY), and raising the total iPhone revenue forecast for that fiscal year by 4%.

Why iPhone 18 Is More Worth Waiting For

Since the day before the iPhone 17 launch event, Apple’s stock has risen by 7% to $255. Morgan Stanley believes this uptick has largely priced in market optimism about the iPhone 17 cycle. Tactically, market prices have already reflected their latest FY26 base case projection.

Despite the strong showing by iPhone 17, Morgan Stanley focuses more on the new cycle around iPhone 18.

The report estimates that at the end of the iPhone 17 cycle (i.e., 12 months from now), only about 415 million iPhones (about 30%) among Apple’s massive installed base will be able to support all Apple Intelligence features. This means that when Apple launches its most innovative product in years—the first foldable-screen iPhone—in FY2027 (beginning autumn 2026), there will still be about 1 billion iPhones in the market that need upgrading to access full AI capabilities.

At that time, Apple will not only launch this revolutionary foldable phone but will release a total of 6 new models in FY27. Carrier subsidies and upgrade incentives are expected to be even more aggressive. All these factors combine to create a highly favorable backdrop, supporting FY27 as another growth year for iPhone sales. Thus, Morgan Stanley’s initial forecast for iPhone shipments in FY27 is 253 million units, much higher than the previous projection of 240.5 million and the market consensus of 247 million units.

Based on these assessments, Morgan Stanley has comprehensively raised its financial outlook on Apple. The bank increased its FY2026 earnings per share (EPS) forecast by 2% to $8.14 and its FY2027 EPS forecast by 6% to $9.30, both above the general market expectation.

 

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