Apple shares could be hitting a limit soon, since there is no obvious short-term boost ahead. At the same time, the rise of AI consumer agents is creating new questions about the future of Apple’s App Store and services.
Morgan Stanley shares this view and recently lowered its price target for Apple, suggesting only a small potential gain from here. The firm still sees Apple’s product plans as some of the most exciting in years, but points out that earnings expectations have barely changed since the latest iPhone launch. After a strong six-month rally, there may not be much room for the stock to climb higher.
Apple shares slipped a bit in premarket trading on Thursday, giving back some of Wednesday’s strong gains. The stock has climbed sharply since late March and is still up solidly for the year.
In addition to its strong performance this year and steady earnings outlook, Apple now faces a longer-term challenge from AI consumer agents being developed by Meta Platforms and OpenAI.
Morgan Stanley says it is watching new risks from alternative marketplaces, changes in developer economics, and the growth of agentic AI platforms. These could eventually take app discovery, distribution, and transactions away from Apple’s ecosystem, which would affect App Store and search revenue. While this risk is still in its early days and it’s not clear how quickly consumers will adopt these changes, the fast growth of AI agents is putting more pressure on Apple to speed up improvements to Siri.
Morgan Stanley is not the only one raising this issue. Bank of America recently pointed out that more people using Meta’s Muse AI agent could hurt Apple’s services revenue over time. As consumers turn to AI agents for tasks like transactions and searches that used to happen within Apple’s ecosystem, the success of Apple’s Siri upgrade is becoming even more important for the company’s future.
This risk is still in its early stages, and Apple’s current business path is not a problem. The main worry is that the stock may not have much room to rise in the near future. Morgan Stanley says Apple’s valuation already looks high, given that earnings forecasts have not improved. At the same time, the long-term future of Apple’s services revenue is becoming more uncertain as more third-party AI-driven workflows appear.
