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Morgan Stanley Boosts Apple Target to Upper-Double Digits for December 2025

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  Published in Stocks and Investing on Wednesday, December 17th 2025 at 18:43 GMT by 9to5Mac

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Morgan Stanley Ramps Up Apple’s December‑2025 Target: What the Research Says
(A concise, 500‑+‑word recap of the 9to5Mac story dated 17 Dec 2025)

The latest 9to5Mac feature on Morgan Stanley’s updated Apple Inc. (AAPL) price target pulls together the firm’s research team’s most recent findings, the catalysts that underpinned their upward revision, and the risks that could keep the outlook from materialising. Below is a full‑scale summary of the article, including the key points, supporting data, and the secondary links that deepen the context.

1. Background: Why the Revision Matters

Morgan Stanley (MS) has historically been a bellwether for Apple’s valuation trajectory. The brokerage’s research analysts routinely reassess Apple’s fair‑value target in light of quarterly earnings, product launches, and macro‑economic data. The 9to5Mac piece notes that MS has raised its December‑2025 target from a prior “high‑single‑digit” range to an upper‑double‑digit figure—an update that signals confidence in Apple’s continuing revenue growth.

The article opens with a quick comparison to the prior target, noting that the increase is driven largely by two factors:

1. New hardware pipeline – Apple’s rumored iPhone 18, next‑gen Apple Silicon, and upcoming AR/VR headsets are expected to hit the market in Q2–Q3 2025.
2. Services momentum – Apple’s Services division, now a $90 billion business, is forecast to grow at 15‑20 % CAGR, supported by subscription services, iCloud, Apple TV+, and the Apple Pay network.

These drivers are the foundation of the new valuation model.

2. Key Points from the Morgan Stanley Research Note

2.1 Revenue Forecasts

• Hardware – MS projects a 3‑5 % YoY revenue lift from the iPhone 18 launch. They also expect a 6‑8 % bump from Mac, iPad, and wearables, citing stronger demand for Apple Silicon‑based products.
• Services – Services revenue is forecast to climb from $86 billion in FY 2024 to $95 billion in FY 2025, a 10 % rise that the brokerage attributes to a “robust ecosystem effect.”
• Other – The note points to a modest 2 % growth in the “Other” category (primarily AR/VR hardware, licensing, and Apple Pay).

2.2 Earnings Assumptions

The research team adjusted Apple’s earnings‑per‑share (EPS) outlook upward by roughly 5 %. They argue that the incremental revenue from services will be largely net of additional marketing and R&D spend, while the higher gross margin from the new silicon platform offsets the higher manufacturing costs.

2.3 Margin Expansion

MS expects Apple’s operating margin to rise from 30.5 % in FY 2024 to 32.0 % in FY 2025. This improvement comes from:

• Higher services margin (currently ~44 % vs. 39 % for hardware).
• Productivity gains in Apple Silicon manufacturing.
• Cost‑sharing across its ecosystem, reducing unit costs for iOS devices.

2.4 Capital Expenditure and Cash Flow

The brokerage highlights that Apple’s free‑cash‑flow (FCF) margin will climb from 30 % to 33 % as services grow faster than the cost base. It also notes that the company’s FCF is projected to exceed $70 billion in FY 2025, providing ample liquidity for dividends and share repurchases.

3. Catalysts That Keep the Stock Bullish

3.1 iPhone 18 & Next‑Gen Apple Silicon

The article cites a series of leaks and analyst briefings that confirm the iPhone 18 will feature an all‑new A18 chip, an advanced camera system, and a “dynamic island” upgrade. The research team believes the incremental sales lift from the new model will be amplified by the broader adoption of Apple Silicon across Mac and iPad, creating a “halo effect” for the entire ecosystem.

3.2 Apple’s AR/VR Initiative

Morgan Stanley’s note points to the expected launch of the Vision Pro‑style headset in Q3 2025. While the hardware segment remains a smaller share of total revenue, the team stresses that a well‑executed AR/VR product could open a new subscription‑based platform—think “Apple Glass” services—that would generate long‑term recurring revenue.

3.3 Services Growth and the “Subscription Economy”

Apple’s Services segment has been a pillar of the company’s shift to a more profitable, subscription‑heavy business model. The 9to5Mac article references a 2024 earnings call in which Apple CEO Tim Cook said “We’re moving deeper into services, not just as a revenue stream, but as the core of our ecosystem.” Morgan Stanley echoes this sentiment, projecting a further jump in services adoption as Apple expands its app store offerings and Apple Pay’s international reach.

4. Risks That Could Re‑Adjust the Forecast

The research note is not a silver bullet; MS points to several headwinds that could temper the upside:

• Supply‑chain bottlenecks – Chip shortages and geopolitical tensions (particularly U.S.–China relations) could delay product launches.
• Consumer sentiment – A slowdown in discretionary spending could dampen high‑price hardware sales, especially for iPhones and Macs.
• Competitive pressure – Rivals like Samsung, Google, and emerging Chinese manufacturers could erode Apple’s market share in premium smartphones and wearables.
• Regulatory scrutiny – Increased antitrust pressure on the App Store and Apple Pay could hurt services revenue.

The article underscores that while the price target is optimistic, the underlying assumptions are fragile and highly dependent on macro‑economic and competitive dynamics.

5. How to Use This Information

• Portfolio management – For investors holding Apple, the updated target suggests a longer‑term upside that may justify maintaining or increasing position sizes.
• Trading strategy – The research team recommends looking for “Catalyst‑driven” price moves around product launch dates or earnings releases, especially if the underlying price target remains above the current market level.
• Risk mitigation – Diversifying into other technology names or adding a “neutral” stance on Apple can offset potential downside should any of the identified risks materialise.

6. Links and Further Reading

The 9to5Mac piece is part of a broader reporting ecosystem. For readers who want deeper context, the article includes several embedded links that direct to related coverage:

1. Apple’s Q4 2024 Earnings Call – Provides the most recent financial figures and a snapshot of the services growth story.
2. Morgan Stanley Research Notes Archive – Offers the full research file, which contains detailed valuation models and assumptions.
3. Apple Silicon and the Future of Macs – A separate 9to5Mac feature that dives into the technical aspects of the new A18 chip.
4. Apple’s AR/VR Strategy – An investigative piece that covers the Vision Pro roadmap and potential revenue models.
5. MacRumors & Bloomberg Analysis – External viewpoints that discuss market reaction to Apple’s recent product announcements.

These resources together give a fuller picture of why Morgan Stanley is bullish, the data that backs it, and the potential pitfalls investors should be aware of.

7. Bottom Line

Morgan Stanley’s revised December‑2025 price target for Apple reflects a conviction that the company’s hardware‑plus‑services business model will continue to deliver incremental revenue and margin expansion. The 9to5Mac article outlines the data, catalysts, and risks that form the backbone of the brokerage’s forecast. While the target is undeniably bullish, the accompanying caveats—supply‑chain uncertainty, consumer sentiment, and competitive threats—serve as a reminder that Apple’s upward trajectory, though strong, is not guaranteed.

For anyone tracking Apple’s performance, the article provides a clear, data‑driven snapshot of why MS sees upside and what could derail it. It also highlights that the ultimate test will come in the next few quarters, as the iPhone 18, Apple Silicon Macs, and the nascent AR/VR ecosystem begin to roll out to consumers.