Morgan Stanley trims its Apple price target to $355, citing iPhone pricing pressure and higher memory-chip costs

Morgan Stanley maintained a bullish stance on Apple but took down its valuation work, cutting its Apple price target to $355 while raising its revenue forecasts, according to a report carried by Yahoo Finance.

The move reflects a split view common in equity research: revenue growth may still hold up, but profitability could be harder to sustain as product pricing and input costs shift. Morgan Stanley’s “catch” was centered on two factors, softer iPhone pricing and higher memory chip costs.

In the report, the iPhone pricing issue is described as pressure on the economics of Apple’s handset business. When average selling prices move down, even a stable unit outlook can translate into less revenue per device and, depending on cost structure, weaker margins.

The second factor was cost-related. The report attributes margin pressure to rising memory chip costs. Memory chips are a key component inside smartphones and other Apple devices, so higher supply-chain costs can flow through to gross margin even if top-line revenue forecasts improve.

Despite the lowered target, the underlying direction of Morgan Stanley’s forecast work still leans positive on sales, with the firm lifting revenue expectations. That suggests the brokerage sees demand or product mix supporting growth, even if it does not currently expect margins to expand at the same pace.

For investors and other market participants, price targets often act as a proxy for an analyst’s view of the near-to-medium term balance between growth and margins. By raising revenue forecasts but reducing the price target, Morgan Stanley is indicating that the market may be underestimating how cost and pricing dynamics could affect earnings power.

Apple’s results and guidance will be watched closely for evidence on both sides of this equation, particularly around iPhone pricing trends and the cost environment for key components like memory. Any update that shows pricing holding up better than expected or chip costs stabilizing could reduce the urgency of the margin concern outlined by the brokerage.

Still, the report does not provide granular disclosure on how Morgan Stanley modeled memory costs, what assumptions drove the iPhone pricing assessment, or how the revised forecasts translate into changes in expected earnings. Further details would typically come from full analyst notes, client communications, or Apple’s own filings and reporting.