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Morgan Stanley has revised Apple’s (NASDAQ:AAPL) iPhone September quarter builds higher by 8%.
Analysts led by Erik Woodring said they are turning more bullish on Apple — noting that forward iPhone unit/revenue growth expectations are still relatively muted, many of the same factors that got them bullish last July remain (elongated replacement cycles/pent up iPhone demand, new form factors in the pipeline, structural gross margin tailwinds, etc.).
The analysts added that they are past peak tariff risk (Section 232 is a non-event), regulation is not as significant of a near-term headwind as feared (but remains a long-term risk), pricing is an underappreciated lever that Apple can pull for both Product and Services (Apple has not raised Services prices in two years), and relative to the S&P, Apple is trading in-line with the trailing five year average.
The analysts added that it feels as though estimates are biased upwards from here, and historically, alongside positive estimate revisions, Apple sees multiple expansion.
Erik Woodring and his team said that their Greater China Technology Hardware team has revised their September quarter iPhone builds 8% higher to 54M units (flat year-over-year) from 50M units (-7% year-over-year).
The analysts added that the positive revisions are because of better than expected iPhone sell through in the June quarter, which reduced iPhone channel inventory below normalized levels, and thus created a larger channel fill opportunity in the September quarter, as the positive build revision is entirely iPhone 16 (2M units) and Pro Max (2M units) models.
However, the analysts noted that they have largely already accounted for this positive revision, as they currently forecast 55M iPhone shipments in the September quarter, about 800K units below what would be implied by the new 54M build forecast.
Looking beyond the iPhone 16, in the second half of calendar year 2025, iPhone 17 builds remain unchanged at 80M to 85M units, or -5% year-over-year to 1% year-over-year versus 84M new model iPhone builds in the second half of calendar year 2024, according to the analysts.
Woodring and his team said that December quarter iPhone build seasonality is more volatile than September quarter builds, and over the last five years (ex-2020 and 2021 given COVID impact), it has ranged from +35% quarter-over-quarter to +71% quarter-over-quarter.