Apple's (AAPL) fiscal Q2 results topped Street estimates, supported by stronger-than-expected product demand and resilient China revenue, Morgan Stanley said in a research note Friday.

The firm noted no signs of channel pull-forward or pull-in during the quarter.

Apple reported fiscal Q2 earnings of $1.65 per share, in line with Morgan Stanley's estimate and ahead of the Street's $1.62 forecast.

Guidance for fiscal Q3 EPS also matched the firm's expectations, with a gross margin of 46% at the midpoint. Morgan Stanley said the tariff impact was better than feared, but noted the company did not provide guidance on Services revenue growth.

The firm added that the company's management did not offer clarity on what share of the product will be sourced from outside China after Q3, its strategies for tariff mitigation, or a timeline for the new Siri rollout.

Given the lingering uncertainty for the second half of 2025 and Street estimates that remain "too high," Morgan Stanley expects the stock to remain range bound.

"With these uncertainties, we assume flattish C2H vs. C1H iPhone shipments to be conservative but admit there is likely more upside than downside risks," according to the note.

Morgan Stanley has an overweight rating and a $235 price target on the stock.

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