Apple's accelerating hardware and software innovation led by the iPhone Duo and Siri AI, along with pricing tailwinds, suggests above-trend growth heading into fiscal 2027, Morgan Stanley said in a Thursday note.

The new foldable iPhone Duo provides "a notably more polished" user experience through Apple's integration of hardware, software and silicon that differentiates it from peers, Morgan Stanley said.

Apple shares were 2.8% higher in Thursday trading.

The firm also sees the iPhone 18 Pro and Pro Max as more robust upgrades than recent Pro cycles, with improvements in camera, battery life, performance and AI.

The relatively modest $100 price increase for the iPhone 18 Pro lineup suggests Apple is prioritizing upgrade volume and gross profit dollars over pure margin preservation, Morgan Stanley said.

Apple also raised prices across legacy models rather than applying the traditional $100 price reduction following a new launch, while higher trade-in values, carrier subsidies and new leasing options could offset the impact, the note said.

Siri AI is more capable than previous versions and is expanding beyond Apple's own applications into third-party content and services, according to the note.

Morgan Stanley maintained its overweight rating and $360 price target on Apple.