Morgan Stanley raises Apple target to $360 as iPhone Duo and AI bets take shape

Morgan Stanley is doubling down on Apple. Analyst Erik Woodring reaffirmed an Overweight rating on AAPL with a price target of $360, a figure that reflects a steady climb from $330 following Apple’s WWDC 2026 event in June. The bank briefly nudged that target to $364 before trimming it back to $360 in July, a minor recalibration driven by near-term friction in Services growth and rising memory costs.

The core thesis, though, has not wavered: Apple’s pivot toward AI monetization, combined with a product lineup that now includes its first foldable device, sets the stage for what Woodring expects to be a meaningful upgrade cycle starting in late 2026 and accelerating into fiscal 2027.

The iPhone Duo changes the product calculus

Apple’s September 9 event, led by new CEO John Ternus, produced the headline product the industry had been anticipating for years. The iPhone Duo, Apple’s first foldable, ships with a 7.6-inch inner display and starts at $1,999 for the 256GB configuration. Pre-orders open October 16, with general availability following on October 23, 2026.

Despite being a low-volume device by Apple’s standards, the bank estimates the foldable could contribute roughly $14 billion in revenue during the December 2026 quarter alone.

The Duo launched alongside the iPhone 18 Pro series, giving Apple two distinct premium anchors heading into the holiday quarter. Together, the firm believes these products reposition the iPhone as an “intelligent personal hub,” a device category built around AI capabilities rather than incremental hardware specs.

AI monetization: the upgrade cycle hiding in plain sight

Apple Intelligence has been the company’s AI branding for its suite of on-device and cloud-assisted features, and WWDC 2026 gave Morgan Stanley clearer visibility into how Apple plans to turn those features into actual revenue. The key vehicle is Siri, which received significant upgrades at the June event.

Between roughly 850 million and 1.3 billion iPhones currently in use lack the hardware needed to support full Apple Intelligence functionality. That is a substantial pool of potential upgraders who, if AI features prove compelling enough, have a concrete technical reason to buy a new phone rather than simply a cosmetic one.

Under what Morgan Stanley describes as its optimistic AI adoption scenario, analysts project mid-teens growth for Apple’s hardware segment and over 10% growth for Services in FY2027. Those numbers flow through to an estimated earnings per share of approximately $10.30 for the fiscal year, which, applied to a roughly 35x earnings multiple, supports the $360 price target.

Near-term, Woodring flagged slower Services growth as part of what prompted the adjustment from $364 to $360. The longer-term view is that AI integration could reignite that segment, with new premium tiers, expanded subscriptions, or AI-specific service offerings adding revenue that doesn’t require selling additional hardware.

What investors are watching now

The risks are real and Woodring names them. Memory costs are rising, which compresses margins on the hardware side. Services growth has already shown it can disappoint relative to elevated expectations.

Samsung and Google have been in the foldable market for years, and neither has managed to make foldables a mass-market category. Apple entering at $1,999 suggests the company is not trying to democratize the form factor out of the gate. The Duo appears to be a margin-maximizing, halo-product play rather than a volume strategy, which explains why Morgan Stanley’s $14 billion December quarter estimate is framed around a low-volume device.

John Ternus, who spent years running Apple’s hardware engineering before stepping into the CEO role, is making the Duo one of his first major product statements.

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