03:48 PM EST, 01/23/2025 (MT Newswires) -- Apple's ( AAPL ) fiscal first-quarter revenue is expected to be largely in line with market estimates, though second-quarter results could take a hit from "muted" iPhone demand, Morgan Stanley said in a note e-mailed Thursday.

The technology giant is scheduled to report first-quarter results Jan. 30. Morgan Stanley trimmed its earnings outlook to $2.31 a share from $2.32 while raising its revenue estimate to $123.97 billion from $123.73 billion. Wall Street is looking for $2.35 and $124.46 billion, respectively, according to the brokerage.

IPhone shipments for the quarter are projected at 76.5 million units, up from the firm's prior outlook of 76 million. Morgan Stanley said its latest checks indicate stable iPhone builds. It lowered its iPhone revenue forecast to $69.08 billion from $69.36 billion versus the Street's $70.82 billion view.

Services growth is now pegged at 13.5%, up from a 12.9% gain projected previously amid upside from App Store "outperformance," the brokerage said. Morgan Stanley's focus would be on updates on the company's recently launched Apple Intelligence technology, as well as on iPhone demand in China, among other things, according to the note.

Morgan Stanley has an overweight rating and a $273 price target on the Apple ( AAPL ) stock.

For the second quarter, the brokerage said it has a "relatively cautious view" on iPhone demand. It lowered its EPS outlook to $1.57 from $1.61 and revenue estimate to $92.62 billion from $92.87 billion. The Street is looking for $1.67 and $96.05 billion, respectively, according to the note.

"We are also (2% to 3%) below consensus expectations in the (third) quarter, meaning unless near-term expectations are fully reset at earnings, and/or product demand inflects higher, the short-term negative earnings revision cycle could persist for few more months," Morgan Stanley wrote.

The company's iPhone installed base is expected to have increased about 6% year over year in the calendar year 2024, finishing the year at 1.4 billion active devices, with its total active product installed base likely reaching more than 2.3 billion devices, the firm said.

"This would imply that the iPhone replacement cycle ended (2024) at a record 4.6 years, up 0.1 year from (2023), and confirmatory of our thesis that there is a record base of eligible iPhone upgraders that serve as a critical cohort for driving iPhone upgrades in (fiscal 2026)," Morgan Stanley said.

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