### Speculations on Apple’s AI Purchase: Insights from Morgan Stanley
Recent conversations have surfaced about Apple’s possible purchase of an AI search firm, with Perplexity being a prominent name in this dialogue. This conjecture arises from Apple’s intention to bolster its capabilities in the swiftly changing AI arena. Nevertheless, Morgan Stanley has voiced doubts about this approach.
In a note to investors published by Morgan Stanley analyst Erik Woodring, the firm contends that the idea of Apple acquiring an AI search engine is “misguided.” Woodring points out that Apple does not intend to compete directly in the search domain, indicating that such a strategy may not fit with the company’s overarching objectives. While recognizing Apple’s hurdles in the AI arena, the note suggests that the company’s long-term success will depend on its capacity to incorporate AI-driven functionalities into its current products instead of moving into the search field.
### Upcoming Q3 Fiscal Earnings Announcement
Apple is set to reveal its fiscal Q3 2025 earnings results on July 31. Morgan Stanley has updated its revenue prediction for this quarter to $90.7 billion, marking a 5.8% rise compared to the previous year. This positive forecast is due to better-than-expected iPhone shipments, higher average selling prices, and sustained demand for iPads and Macs.
Despite some investor concerns regarding recent events, such as an App Store injunction and the absence of guidance during the last earnings call, Morgan Stanley continues to be optimistic about Apple’s Services segment. The firm anticipates an 11.6% year-over-year increase in Services revenue, reflecting strength in this area.
### Analyst Ratings and Price Objectives
Woodring holds an Overweight rating on Apple’s shares, suggesting that it has the potential to exceed market performance. He has established a price target of $235, surpassing the targets set by other financial entities like HSBC at $220 and JPMorgan at $230. This indicates a favorable outlook regarding Apple’s future performance, especially concerning its hardware and services divisions.
### Summary
As speculation about Apple’s potential acquisition of an AI search firm like Perplexity persists, Morgan Stanley’s analysis offers a contrasting perspective, proposing that Apple’s priority should be on improving its current product lineup through AI integration rather than stepping into the competitive search market. As the company gears up to announce its fiscal Q3 earnings, the market will be paying close attention to how these elements influence Apple’s financial outcomes.
