Morgan Stanley has reduced its price target for Apple to $360 from $364, citing slowing Services growth and increased memory costs. Despite strong product demand, analyst Erik Woodring noted that two key supporting factors for Apple's stock – Services and gross margins – are under pressure.

While the iPhone remains a strong point, the investment bank lowered its fiscal 2027 earnings estimate for Apple from $10.39 to $10 per share. Apple reported robust third-quarter revenue of $109.4 billion, with iPhone revenue reaching a record $54.3 billion. However, Services revenue growth of 12% fell short of expectations, projected to dip below 10% for the first time since June 2023, partly due to foreign exchange and weaker App Store performance.

Higher memory costs are expected to impact Apple's gross margin sequentially. Morgan Stanley's revised $360 target is based on projected calendar 2027 earnings of $10.30 per share. Despite near-term concerns, the firm remains positive about Apple's long-term prospects, highlighting its growing installed base, cash generation, and potential in areas like AI and cloud services.