Apple Faces ‘Slightly Challenging’ Earnings Setup Near Record Highs, Morgan Stanley Says — Sees Limited Upside Potential

• Morgan Stanley expects Apple to forecast low-to-mid single-digit year-over-year revenue growth for the December quarter.
• The firm expects limited earnings-per-share upside with Apple stock near record highs
• Apple reportedly said it will offer limited quantities of its foldable iPhone Duo to walk-in customers on Friday after online preorders sold out within minutes.

Apple Inc. (AAPL) faces a “slightly challenging near-term setup” heading into earnings, according to Morgan Stanley, which expects limited upside to quarterly results and potentially softer-than-expected holiday-quarter guidance.

The firm maintained its ‘Overweight’ rating and $355 price target, implying approximately 4.6% potential upside from Apple's Tuesday closing price of $339.50, according to a note cited by TheFly.

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As of this writing, AAPL stock was trading 1% higher, pushing the company’s market cap to above the $5 trillion mark once more.

Morgan Stanley Sees Limited Earnings Upside for Apple

Morgan Stanley expects Apple to report September-quarter results broadly in line with expectations and forecast low-to-mid single-digit year-over-year revenue growth for the December quarter.

That outlook would fall slightly below the firm's and Wall Street's estimates but align with expectations among institutional investors on the buy side. The firm also expects December-quarter iPhone revenue and gross margins to come in slightly below Street forecasts.

With Apple shares trading near record highs and limited earnings-per-share (EPS) upside anticipated, Morgan Stanley said the upcoming results are unlikely to “tip the scales for bears or bulls.”

Apple's latest reported quarterly revenue rose 16% year over year to $109.4 billion, while gross margin reached 50.1%, including a roughly two-percentage-point benefit from tariff refunds.

iPhone Duo Launch Faces Supply Constraints

Separately, Apple said Wednesday that only limited quantities of its new foldable iPhone would be available to walk-in customers when the device launches on Friday, October 23, 2026.

A Reuters report quoted Apple saying, “Apple Stores will ‌have ⁠limited iPhone Duo available for walk-in customers, and we’re working hard to get this revolutionary new product into customers' hands as quickly as possible.”

Initial online preorders sold out within minutes, pushing delivery estimates for some customers into January 2027. According to 9to5Mac, Apple has also restricted purchases to two devices per customer across multiple markets.

Analyst Flags iPhone Shipment Risks

Loop Capital analyst Ananda Baruah downgraded Apple to ‘Hold’ from ‘Buy’ on Tuesday and cut its price target on the stock $330 from $370. The firm said Apple had reduced planned September- and December-quarter iPhone shipments by 10%, per TheFly. 

Apple is set to report fiscal fourth-quarter earnings on November 2, with investors focused on iPhone sales, profit margins and potential pressure from rising component costs.

Retail Investors’ Sentiment Around AAPL Stock

On Stocktwits, retail investors’ sentiment around AAPL stock remained ‘extremely bearish’.

So far this year, AAPL shares have rallied over 26%, the best-performing stock among the Magnificent Seven. By comparison, the Roundhill Magnificent Seven ETF (MAGS), and the Vanguard Information Technology ETF (VGT), which hold the stock, have risen around 11% and 29%, respectively, over the same period.

See Also: AMD, QCOM Targets Raised While INTC, COHR Face Cuts — Susquehanna Sees ‘Modest Upside’ For Chip Earnings

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