<p>Morgan Stanley believes that Apple WWDC 2025 lacks significant breakthroughs, and the path to realizing its AI story may be longer.</p>
<p>According to news from the Chasing Wind Trading Desk, Morgan Stanley released a research report on the 10th, stating that Apple's updates lack major AI breakthroughs, indicating that Apple's progress in the AI field may be slower than expected.</p>
<p>Although Apple has launched the &#34;Apple Intelligence&#34; feature, the upgrades to AI capabilities are limited, and a more personalized Siri is still pending. Currently, only 20% of iPhones support the new AI features. Additionally, the collaboration with Google Gemini and the approval progress of Apple Intelligence in the Chinese market are insufficient.</p>
<p><strong>Morgan Stanley maintains an &#34;Overweight&#34; rating on Apple with a target price of $235, believing that Apple still has key elements to win in the AI era due to its strong ecosystem, user base, and privacy standards, but short-term investor sentiment may not see significant changes.</strong> Before the U.S. stock market opens, Apple's stock price is basically flat at $201, leaving a 16% upside potential to Morgan Stanley's target price.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/71077e36-a865-4868-9bc3-9e6057874446.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/71077e36-a865-4868-9bc3-9e6057874446.png"/></p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/35ef2004-ea82-4232-a1b9-833fd2c305aa.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/35ef2004-ea82-4232-a1b9-833fd2c305aa.png"/></p>
<h2>AI Features Making Small Steps, Siri Upgrade Still Awaited</h2>
<p>Morgan Stanley stated that Apple introduced several new Apple Intelligence features at WWDC 2025, including broader language support, deep integration with ChatGPT, and real-time translation. Notably, Apple has opened its large language model to over 30 million developers worldwide, akin to a modernized App Store moment.</p>
<p>However, software chief Craig Federighi previewed that a more personalized Siri will be launched &#34;in the next year,&#34; <strong>which aligns with investor expectations but still has a long timeline. Currently, only 20% of iPhones can support Apple Intelligence, indicating that upgrade opportunities still exist.</strong> If Apple charges $9.99/month for the premium &#34;Apple Intelligence&#34; subscription, just a 10% adoption rate of the install base could cover all costs paid to Google for TAC.</p>
<h2>Lack of Important Cooperation Progress, Key Markets Still Awaiting Breakthroughs</h2>
<p><strong>This conference neither announced new Gemini partnerships nor secured approval for Apple Intelligence in China.</strong> Morgan Stanley noted that potential collaboration with Google Gemini seems to be hindered by the Google/Department of Justice case
According to Morgan Stanley, Apple's approval of Apple Intelligence in China is a more significant catalyst. Morgan Stanley's November 2024 AlphaWise smartphone survey shows that Chinese users have the highest interest in Apple Intelligence, with 90% of iPhone users indicating they are willing to pay for it.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/5c153689-baa3-4ddf-99c7-47874d47817c.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/5c153689-baa3-4ddf-99c7-47874d47817c.png"/></p>
<h2>&#34;Liquid Glass&#34; Design Unifies Ecosystem Experience</h2>
<p>Apple has introduced a &#34;liquid glass&#34; design across all hardware operating systems, combining the optical qualities of glass with the fluidity of liquid, emphasizing transparency and light as key features to enhance user experience. Morgan Stanley believes these enhancements help create a more unified experience across hardware devices, enhancing the ecosystem experience.</p>
<p>Apple is also maximizing the content displayed on the screen through applications by using a semi-transparent toolbar with dynamic control groups to facilitate easier navigation between applications.</p>
<blockquote>
<p>“Overall, these improvements remind us of past Worldwide Developers Conferences, highlighting Apple's innate attention to detail. <strong>However, as financial analysts, we believe the significance of these upgrades is relatively small.</strong>”</p>
</blockquote>
<h2>iPad is Becoming a True Alternative to PCs</h2>
<p>Morgan Stanley believes the iPad has made meaningful progress over the past 1-2 years, primarily due to the powerful performance of the iPad Pro and the latest updates to iPadOS. Today's announcement further advances this progress, <strong>with new features such as window tiling, control, and resizing making the iPad a true PC alternative.</strong></p>
<p>Morgan Stanley data shows that iPad builds are expected to grow by 9% year-on-year in the first half of 2025, while PC shipments (including Windows 11 upgrades) are expected to grow by only 3%.</p>
<h2>Vision Pro Demonstrates Commitment to Spatial Computing</h2>
<p>Although consumer adoption of Vision Pro remains extremely limited, Morgan Stanley believes Apple's visionOS upgrade clearly indicates the company's commitment to its spatial computing platform. Apple is still expected to launch a more design-friendly, downgraded AR (and AI) version of Vision Pro by the end of 2026 for broader adoption.</p>
<h2>Investment Outlook: Long-term Potential with Short-term Challenges</h2>
<p>Morgan Stanley maintains a target price of $235 for Apple, based on a 7.9x EV/sales multiple for fiscal year 2026. <strong>Although Apple lags behind today's AI winners in AI advancements, the company still possesses six key differentiating advantages:</strong></p>
<blockquote>
<ul>
<li>Unified hardware, software, services, and chip architecture;</li>
<li>Rich personalized data;</li>
<li>A leading technology ecosystem with over 1.5 billion users and 2.4 billion devices;</li>
<li>Over 30 million global developer partners;</li>
<li>A balance sheet capable of supporting computing investments;</li>
<li>Industry-leading privacy standards.</li>
</ul>
</blockquote>
<p>However, before investors gain greater confidence in the differentiated and monetizable nature of agent-based, Siri-supported AI assistants, stock sentiment is unlikely to undergo a significant shift, making Apple's catalyst path longer than typical at this point in the cycle</p>

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<p>Morgan Stanley believes that although Apple has launched the "Apple Intelligence" feature, the AI functionality upgrades are limited, and a more personalized Siri is still to come. Currently, only 20% of iPhones support the new AI features. Apple still possesses key elements for success in the AI era due to its strong ecosystem, user base, and privacy standards, but investor sentiment may not see significant changes in the short term</p>

- Morgan Stanley believes that Apple's WWDC 2025 lacks significant breakthroughs in AI, indicating slower-than-expected progress in this area.  
- Despite the introduction of "Apple Intelligence," only 20% of iPhones support the new AI features, and key partnerships, particularly in China, remain unannounced.  
- Morgan Stanley maintains a "buy" rating with a target price of $235, citing Apple's strong ecosystem and user base as critical advantages, though short-term investor sentiment may not shift significantly.

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Morgan Stanley comments on WWDC conference: Lack of significant AI updates, the realization path of Apple's AI story may be longer