Morgan Stanley has dismissed the idea of Apple acquiring an AI search engine as a “misguided” strategy, according to analyst Erik Woodring, who stated that Apple does not intend to compete in the search market.
Despite ongoing rumors suggesting that Apple might acquire an AI search firm like Perplexity to enhance its AI capabilities, Woodring emphasized that Apple’s focus lies elsewhere. He acknowledged Apple’s current challenges in the AI sector, noting that the September quarter is unlikely to feature significant Apple Intelligence updates, and that the company’s success with AI-driven features is a long-term endeavor.
Looking ahead, Apple is scheduled to release its fiscal Q3 2025 earnings results on July 31. Morgan Stanley anticipates a strong performance across both hardware and services, having increased its revenue forecast for the quarter to $90.7 billion, representing a 5.8% year-over-year increase. This revised outlook is attributed to better-than-expected iPhone shipments, higher average selling prices, and sustained robust sales in iPad and Mac categories.
Services revenue is also projected to be a key highlight, despite investor concerns stemming from a recent App Store injunction and Apple’s decision not to issue guidance during its previous earnings call. Morgan Stanley forecasts an 11.6% year-over-year growth in Services revenue, seeing no indications of a slowdown.
Woodring has maintained an Overweight rating for Apple stock, indicating his belief that it will outperform the broader market. He set a price target of $235, which surpasses recent targets from HSBC ($220) and JPMorgan ($230).
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