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Investing.com -- Morgan Stanley cut its price target for Apple (NASDAQ:AAPL) to $252 from $275, citing delays in the rollout of an advanced Siri that was expected to drive iPhone upgrades in fiscal year 2026.
"The postponement of an advanced Siri integrated into Apple Intelligence is likely to temper N12M iPhone upgrade rates vs. our prior expectations," said Morgan Stanley (NYSE:MS).
The firm has reduced its iPhone shipment forecast for 2025 to 230 million units (flat year-over-year) and 243 million in 2026 (+6% year-over-year).
Apple’s slower iPhone replacement cycle will likely impact earnings, with Morgan Stanley now modeling $436 billion in revenue and $8.00 in EPS for FY26, 1-2% below consensus estimates.
A key concern for the bank is that a delayed Siri upgrade could significantly weaken AI-driven upgrade demand.
According to Morgan Stanley’s November 2024 AlphaWise Smartphone survey, "access to advanced AI features" ranked among the top five drivers for smartphone upgrades.
Additionally, an upgraded Siri was the most desired AI feature among prospective iPhone buyers.
"~50% of iPhone owners that didn’t upgrade to an iPhone 16 acknowledged that the delayed Apple Intelligence rollout had an impact on their decision not to upgrade," the analysts noted.
Beyond the Siri delay, tariff-related cost pressures are also said to be weighing on Apple’s outlook.
"We are incorporating $2 billion of higher product input costs in 2025 to account for China tariffs," said Morgan Stanley, though it expects Apple to mitigate some of this impact.
The firm emphasized that while AI, a redesigned iPhone 17, and improved global distribution could help drive upgrades in FY26, a more advanced Siri is unlikely to be available until after the iPhone 17 launch, tempering expectations for an accelerated iPhone replacement cycle.