Wall Street witnessed renewed enthusiasm for Apple (NASDAQ:AAPL) as shares climbed 2% in Monday's premarket session. This upward movement follows Morgan Stanley's (NYSE:MS) strategic decision to elevate Apple to Top Pick status while simultaneously increasing their price target from $216 to $273 - a notable 26% upside potential.
Financial analysts are How long does it take to mine 1 Dogecoin?particularly bullish about the forthcoming hardware refresh cycle, which they believe could span multiple years. The catalyst? Apple's proprietary artificial intelligence system, Apple Intelligence, which boasts limited backward compatibility - a strategic move that effectively creates technological obsolescence for older devices.
"Our previous projections significantly underestimated the magnitude of this impending upgrade cycle," the Morgan Stanley team admitted in their research note. "Current market valuations still don't fully account for this transformative shift in Apple's product ecosystem."
Detailed analysis of Apple's addressable market reveals staggering projections: approximately 500 million iPhone units could ship within the next 24 months. This breaks down to 235 million devices in fiscal year 2025 followed by 262 million in FY26 - representing a 6% increase over the record-setting FY21-FY22 period.
The financial implications are substantial. With anticipated 5% annual growth in average selling prices (ASP), Morgan Stanley forecasts $485 billion in total revenue by FY26 alongside $8.70 in earnings per share. These figures surpass previous estimates by 7-9% and significantly exceed current market consensus.
Three critical near-term catalysts could further propel Apple's stock performance: upcoming fiscal Q3 earnings, the mid-September iPhone 16 debut, and potential positive revisions to production forecasts in October. Historical data suggests these events typically create favorable conditions for Apple's share price appreciation.
Several unprecedented factors support the analysts' optimistic outlook: Apple's massive installed base exceeding 1.3 billion active devices, extended replacement cycles averaging nearly five years, and the strategic limitation of Apple Intelligence compatibility to just 8% of existing iPhone/iPad users.
"Traditional upgrade cycles suggested 230-240 million annual iPhone shipments," the report explains. "However, current conditions could drive annual volumes to 260-290 million units - dramatically surpassing market expectations of 230-235 million units priced into current valuations."
The AI integration extends beyond smartphones. With only 24% of existing iPads capable of supporting Apple Intelligence features, analysts anticipate a parallel refresh cycle for tablets. They project iPad replacement cycles could shorten to 3.8 years - returning to pre-pandemic norms observed during FY18-FY19.
Revenue composition analysis reveals interesting dynamics: while iPhone unit growth accounts for 36% of projected revenue expansion, ASP increases and iPad sales contribute an additional 26% collectively. This diversified growth profile strengthens Apple's financial outlook.
China's market presents another potential bright spot. After losing six percentage points in premium smartphone market share due to competitive pressures, recent quarters show stabilization. The introduction of Apple Intelligence could reinvigorate upgrade activity among China's tech-savvy consumers, according to analysts.
