Apple (AAPL.US) is expected to enter a record-breaking upgrade cycle, with Wall Street raising its price targets

Apple (AAPL.US) is set for a record multi-year upgrade cycle as Apple Intelligence provides a clear catalyst, says Morgan Stanley.

Erik Woodring, Maya Neuman and Oluebbe Udochukwu, analysts at Morgan Stanley, said in a note: "Our analysis of Apple's upgradeable iPhone user base, upgrade rate, new user growth and iPhone model mix suggests that Apple will ship ~500mn iPhones over the next two years, up 6% from the record cycle in FY2021-22, while driving a 5% YoY increase in the average selling price of iPhone to ~$485bn in total revenue and ~$8.70 in profitability in FY2026, 7-9% above consensus."

Morgan Stanley previously had a revenue forecast of $45.9bn for Apple in FY2026 and earnings per share of $8.20.

Morgan Stanley also raised its target price for Apple to $273 from $216 and added the stock to its "first pick" list.

The firm expects Apple to ship 235mn and 262mn iPhones in FY2025 and FY2026 respectively.

Meanwhile, Loop Capital on Monday also raised its rating on Apple from "hold" to "buy", with a target price of $300, almost double.

John Donovan, Loop Capital's supply chain analyst, said in a Monday note that Apple has an opportunity to "cement its position as the consumer's go-to AI hub, just as it did for social media (iPhone) 15 years ago and digital content consumption (iPod) 20 years ago."

Ananda Baruah, analyst at Loop Capital, said: "These trends are important stock catalysts, and basic math suggests that Gen AI has the potential to be a similar catalyst."

Apple is scheduled to report its third-quarter FY2024 earnings on Tuesday after the bell, with analysts expecting earnings per share of $1.32 and revenue of $83.73bn.