Morgan Stanley has cautioned against the notion of Apple acquiring an AI search engine, deeming it a “misguided” strategy. Analyst Erik Woodring stated in an investor note (via AppleInsider) that Apple does not intend to compete in the search market, despite ongoing rumors suggesting the company might acquire an AI search firm like Perplexity to bolster its AI capabilities.
Woodring acknowledged Apple’s current challenges in the AI sector, noting that the September quarter is unlikely to feature significant Apple Intelligence updates. He emphasized that Apple’s success with AI-driven features is a long-term endeavor.
Looking ahead, Apple is scheduled to release its fiscal Q3 2025 earnings results on July 31. Morgan Stanley anticipates a strong performance across both hardware and services. The firm has increased its revenue forecast for the quarter to $90.7 billion, representing a 5.8% year-over-year increase. This revised outlook is attributed to better-than-expected iPhone shipments, higher average selling prices, and sustained robust sales in iPad and Mac categories.
Services revenue is also projected to be a key highlight, despite investor concerns stemming from a recent App Store injunction and Apple’s decision not to issue guidance during its previous earnings call. Morgan Stanley forecasts an 11.6% year-over-year growth in Services revenue, seeing no indications of a slowdown.
Woodring has maintained an Overweight rating for Apple stock, indicating his belief that it will outperform the broader market. He set a price target of $235, which surpasses recent targets from HSBC ($220) and JPMorgan ($230).
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