11:18 AM EDT, 10/31/2025 (MT Newswires) -- Apple's ( AAPL ) fiscal Q4 financial results and fiscal Q1 guidance of double-digit revenue growth indicate a reacceleration in iPhone growth, aided by strong upgrade activity and a peaking replacement cycle, Morgan Stanley said in a note Friday.

Upgrade strength is sustainable, as about 600 million iPhones would not be able to run Apple Intelligence by the time the iPhone 18 family, including the first foldable iPhone, is launched next year, the firm said.

Management's higher operating expenses guidance for the December quarter, driven by artificial intelligence investments, came as a surprise, the firm said, adding it is now projecting a 27% year-on-year R&D growth in fiscal 2026, which should reassure investors that the company believes there will be a future return on such investments.

The iPhone 17 momentum, excitement around iPhone 18, and services outperformance are expected to keep estimate revisions biased upwards, the note added.

Morgan Stanley raised its price target to $305 from $298, and maintained an overweight rating on the stock.

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