Morgan Stanley analysts reiterated an Overweight rating on Apple (NASDAQ:AAPL) with a price target of $273, noting that shares have surged to all-time highs, outperforming the S&P 500 by 10 percentage points in recent weeks. The firm maintained its confidence in Apple’s long-term growth potential, particularly heading into fiscal 2026.

While recent outperformance was partially attributed to market dynamics and short covering, the analysts emphasized Apple’s capacity to generate over $8.50 in earnings per share by fiscal 2026. This expectation, coupled with early pricing of the next iPhone cycle, has likely contributed to the stock's near-term gains.

Near-term demand trends painted a mixed picture. Apple’s Services segment outperformed expectations with strong growth, while iPhone and product revenue remained relatively muted, constrained by the limited global availability of Apple Intelligence outside the U.S. Despite these challenges, fiscal 2025 was projected to serve as a calm period before a significant acceleration in 2026 fundamentals.

The analysts outlined five key reasons for optimism: limited risks from Google TAC (traffic acquisition costs) in the medium term, anticipated acceleration in iPhone replacement cycles driven by Apple Intelligence in 2026, minimal exposure to China import tariffs, sustained double-digit growth in Services, and potential upside in iPhone gross margins.