Morgan Stanley reduced its earnings estimates for Apple (AAPL, Financials) and lowered its price target, citing the impact of China tariffs and a delayed rollout of the company’s artificial intelligence updates.
A research report from analyst Erik Woodring shows the company’s forecast of earnings per share for fiscal year 2026 dropped from $8.52 to $8.00. The drop underscores difficulties with new U.S. taxes on Chinese imports, which should raise Apple’s manufacturing costs. Although the business is trying to minimize the effects of the tariff, Woodring said it is unlikely to completely balance the cost without wide exemption, which has not been granted.
Citing a delay in Apple Intelligence upgrades for Siri, Morgan Stanley also revised its iPhone sales projection for calendar year 2025 to 230 million from 243 million. Apple acknowledged that the scheduled update in May 2025 is now probably going to arrive in 2026.
Features meant to improve the assistant’s utilityon-screen awareness, personal context, and deep app integrationare slated to be included in the next Siri upgrade. Still, the delay has influenced choices about consumer upgrades. According to a November 2024 AlphaWise Smartphone poll, judgments on smartphone purchase are starting to rely more on artificial intelligence capacity. About half of iPhone customers who opted not to upgrade to an iPhone 16 mentioned the delayed Apple Intelligence release as the cause of their postponing of their purchase.
Maintaining an Overweight rating, Morgan Stanley lowered Apple’s price target from $275 to $252, therefore showing long-term confidence in the firm despite very immediate difficulties. The delayed AI deployment may also influence the launch cycle of the iPhone 17, which would have witnessed more demand should the Siri upgrade have been released sooner, the company observed.
This article first appeared on GuruFocus.
