Days before Apple earnings, Morgan Stanley has chimed in on the quarter, and believes that high iPhone 17 demand means Apple will beat its own revenue expectations, but the memory shortage is looming.

The first-quarter results of 2026 will be favorable for Apple, Monday's note to investors from Morgan Stanley reads, with overall revenue at $139.5 billion for the quarter. That represents a year-over-year growth of 12.3%, and be accompanied by an earnings per share of $2.70.

At the time of the Q4 2025 results, CEO Tim Cook said in interviews that Apple expected an overall revenue increase of between 10% and 12% year-over-year for Q1 2026. He added an expectation that it would be the best quarter ever in the history of the company, thanks to the "off the chart" reception of the iPhone 17.

Of that total, iPhone will make up $80 billion, 4% above the consensus, based on one of the strongest iPhone cycles in history. Morgan Stanley's supply chain checks indicate stronger iPhone 17 shipments for the December and March quarters than previously modelled.

That includes what appear to be above-seasonal March quarter build orders at 56 million, up 12% year-over-year, implying 60 million iPhone shipments in the period. For the December quarter, checks seemed to demonstrate shipments at around 90 million units.

Morgan Stanley's iPhone 17 sentiment matches commentary from others, believing it to be a bumper year for the smartphone line. It helped increase Apple's market share in 2025, even though there is the general beliefthat the iPhone Air didn't do that well compared to the rest of the range.

When it comes to other areas, iPad is expected to bring in $7.98 billion, Mac should hit $9.3 billion, Wearables, Home, and Accessories should get to $12.5 billion, and Services will rise to $29.8 billion.

Memory isn't a short-term problem

For the ongoing industry-wide problem of memory pricing, Morgan Stanley believes it is being more cautious than the consensus in determining its impact. With memory price inflation becoming more severe, prices of important parts will become even more of a problem for manufacturers.

In the March quarter, NAND prices are anticipated to grow between 55% and 60% quarter-to-quarter, while mobile DRAM will rise by 53% to 58%.

That future quarter won't be a massive problem for Apple, as supply chain checks indicate it has sufficient lower-cost NAND inventory to last the period, minimizing the more expensive stock top-ups where possible.

After the March quarter, it will become a problem for Apple, though. Morgan Stanley anticipates greater headwinds from memory affecting product forecasts, and assumes Apple will raise iPhone 18 prices by $100 to match.

Even so, Morgan Stanley is still "positive" on strong iPhone 17 demand bleeding into a "better-than-feared" iPhone 18 cycle.

Morgan Stanley has a current price target for Apple set at $315, and rates the stock itself as "Overweight." It has historically been the most pro-Apple of any other firm.