There’s been no shortage of rumors about Apple’s supposed intentions of acquiring an AI search company, such as Perplexity, to help it catch up in the AI race. And while many seem to agree that this would be at least a partial solution to Apple’s problems, Morgan Stanley isn’t that convinced.
In an investor note published today (via AppleInsider), Morgan Stanley analyst Erik Woodring states that it is “misguided” to think that Apple should acquire an AI search engine, as it is not the company’s intention to compete in the search market.
The note acknowledges Apple’s struggles in this field, and states that while the September quarter will also not bring many Apple Intelligence-related updates, Apple’s ability to capitalize on AI-driven features remains a long-term play.
A positive outlook on the upcoming fiscal Q3 report
Apple is set to release its fiscal Q3 2025 earnings results on July 31. Morgan Stanley expects them to show solid performance across hardware and services.
The firm has raised its revenue forecast for the quarter to $90.7 billion, up 5.8% year-over-year, citing stronger-than-expected iPhone shipments, higher average selling prices, and continued strength in iPad and Mac sales.
Services are also expected to be a highlight, despite investor concerns from the recent App Store injunction, added to Apple’s decision not to issue guidance during its last earnings call. Morgan Stanley sees no signs of a slowdown, and now projects Services revenue will grow 11.6% year-over-year.
In the note, Woodring maintains Apple’s Overweight rating, meaning he believes the stock can still outperform the broader market. He set a $235 price target, above the recent price targets set by HSBC ($220), and JPMorgan ($230).
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