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Investing.com -- Morgan Stanley stated in a note on Wednesday that it anticipates the One Big Beautiful Bill Act (OBBBA) will provide a meaningful boost to free cash flow (FCF) across the IT hardware sector, with Apple (NASDAQ:AAPL) among the primary beneficiaries.
“We estimate the One Big Beautiful Bill Act (OBBBA) can add 12% upside to our IT Hardware coverage FCF in 2025, and 5%, on average, annually, to our coverage over the next 4 years,” Morgan Stanley (NYSE:MS) analysts wrote.
The bill allows companies to immediately deduct R&D and capital investment expenses from U.S. taxes, accelerating tax savings and increasing near-term cash flow.
Morgan Stanley projects the legislation will generate more than $12 billion in incremental cash flow for covered names over the next year and $20 billion cumulatively over four years.
“This benefit is mostly about timing, as it pulls forward future tax savings rather than changing the long-term cash flow picture,” the analysts said.
Apple is forecast to account for 90–95% of the total OBBBA-related FCF uplift within the bank’s hardware coverage.
“Notably, Apple (AAPL) is expected to account for the vast majority of group FCF tailwinds,” the note stated. On a percentage basis, 2025 FCF uplifts are said to include Garmin (NYSE:GRMN) (31%), Resideo (20%), Cricut (NASDAQ:CRCT) (13%), and Apple (12%).
Morgan Stanley expects GRMN and CRCT to sustain the strongest average annual tailwinds, 9% each, over the next four years.
By contrast, Dell (NYSE:DELL), IBM (NYSE:IBM), Intuitive Machines, and Sonos (NASDAQ:SONO) are “unlikely to materially benefit,” the analysts wrote.