Morgan Stanley: Apple AI Search Acquisition – Misguided?
Morgan Stanley Bullish on Apple’s Q3, Dismisses AI Search Acquisition Talk
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While the buzz around artificial intelligence continues to dominate tech conversations, Morgan Stanley isn’t convinced that Apple needs to dive headfirst into acquiring an AI search engine. Rather, the financial giant believes Apple’s AI strategy is a long-term play, and they’re feeling optimistic about the company’s upcoming fiscal Q3 earnings report.
A Long-Term Vision for Apple Intelligence
In a recent investor note, Morgan Stanley analyst Erik Woodring shared his perspective, calling the idea of Apple acquiring an AI search engine “misguided.” He emphasized that Apple’s core intention isn’t to directly compete in the search market. While acknowledging Apple’s current challenges in this specific area, Woodring pointed out that significant updates related to Apple Intelligence are unlikely in the immediate September quarter. However, he stressed that Apple’s ability to leverage AI-driven features is a strategic, long-term endeavor.
Positive Outlook for Fiscal Q3 Earnings
Apple is slated to release its fiscal Q3 2025 earnings results on July 31st, and Morgan stanley anticipates a strong showing across both hardware and services. The firm has boosted its revenue forecast for the quarter to $90.7 billion, representing a 5.8% year-over-year increase. This optimism is fueled by stronger-than-expected iPhone shipments, higher average selling prices, and continued robust sales of iPads and Macs.
Services are also expected to be a standout performer. Despite investor concerns stemming from the recent App Store injunction and Apple’s decision not to issue guidance in its last earnings call, Morgan Stanley sees no signs of a slowdown. They now project Services revenue to grow by an notable 11.6% year-over-year.
Woodring reiterated his “Overweight” rating for Apple stock, indicating his belief that the stock has the potential to outperform the broader market. He has set a price target of $235, surpassing the recent targets set by HSBC ($220) and JPMorgan ($230).
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