Investment firm Morgan Stanley (MS) recently increased its estimate for Apple’s (AAPL) iPhone production in the September quarter by 8%. Indeed, it is now forecasting 54 million units instead of 50 million for the tech giant. This change is due to stronger-than-expected iPhone sales in the June quarter, which brought inventory levels below normal and opened up more room for restocking. Analysts led by Erik Woodring highlighted that the increased production is focused entirely on the upcoming iPhone 16 and iPhone 16 Pro Max, with each contributing an extra 2 million units.
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Interestingly, the team at Morgan Stanley is becoming more optimistic about Apple overall. In fact, it believes that many of the same positive trends from last year are still in place, such as longer iPhone upgrade cycles, strong demand buildup, and new product designs in the pipeline. It also notes that the peak risks from tariffs have likely passed. Additionally, Apple hasn’t raised prices for its Services segment in two years, which is something the analysts view as an underused strategy that could drive future growth. As a result, they believe that earnings estimates are likely to trend higher, which historically has led to rallies for Apple stock.
Looking further ahead, the analysts kept their iPhone 17 production forecast unchanged at 80 to 85 million units for the second half of Calendar Year 2025. This range is slightly below or roughly in line with the 84 million new-model iPhones produced in the second half of 2024. They also noted that iPhone production in the December quarter tends to be more volatile than in the September quarter. Indeed, excluding the COVID years (2020 and 2021), December builds have fluctuated from 35% to 71% higher than the previous quarter.
Is Apple a Buy or Sell Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on AAPL stock based on 16 Buys, 11 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average AAPL price target of $239.18 per share implies 3.5% upside potential.
