Apple’s iPhone 17 series is generating stronger-than-expected consumer demand across most models, with Morgan Stanley analysts reporting potential supply chain production increases to meet overwhelming orders. The investment bank’s latest research indicates robust early sales for the iPhone 17, 17 Pro, and 17 Pro Max, though the ultra-thin iPhone Air faces “relative weakness” in the competitive smartphone market.
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Strong Early Performance Across Core Models
Morgan Stanley’s analysis reveals consistently extended shipping estimates across Apple’s online store, with delivery times stretching to 3-4 weeks for popular configurations of the iPhone 17 Pro and Pro Max. The investment firm’s supply chain checks indicate Apple may increase second-half 2025 production targets from 84-86 million units to over 90 million devices to address the sustained demand. “Our supply chain checks suggest an iPhone 17 build increase is likely imminent,” wrote Morgan Stanley analyst Erik Woodring in a research note obtained by Bloomberg.
The strong performance comes despite economic headwinds affecting consumer electronics spending globally. According to Counterpoint Research’s latest market analysis, premium smartphone segments have shown resilience with 6% year-over-year growth in Q2 2025, suggesting consumers continue prioritizing flagship devices despite broader market softness. Apple’s ability to maintain pricing power while increasing shipment volumes reflects the company’s strong brand positioning and customer loyalty metrics.
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iPhone Air Faces Market Challenges
While most iPhone 17 models exceed expectations, the ultra-thin iPhone Air has encountered what Morgan Stanley describes as “relative weakness” in early adoption rates. The $1,299 starting price for the Air model positions it as a premium offering even within Apple’s lineup, creating potential price sensitivity among consumers. Industry analysts suggest the specialized form factor may appeal to a narrower demographic than Apple’s mainstream models.
The iPhone Air’s market reception highlights the challenges of introducing new form factors in a mature smartphone market. According to IDC’s latest wearable technology report, ultra-thin devices represent only 8% of the premium smartphone segment, suggesting limited market appetite for thickness-focused innovations. Consumer preference appears to favor the balanced feature sets of traditional models over specialized designs, particularly at premium price points where functionality expectations remain high.
Financial Implications and Stock Performance
Morgan Stanley has raised its Apple price target to $298 based on the stronger-than-anticipated iPhone 17 performance, though analysts caution that current stock prices around $256 already reflect much of the positive demand outlook. The investment bank suggests Apple would need to demonstrate “more sustained near-term stock outperformance” to justify further upward revisions. Apple’s shares have gained 14% year-to-date, outperforming the S&P 500’s 8% increase during the same period.
The financial impact extends beyond immediate stock performance, with iPhone revenue representing approximately 52% of Apple’s total revenue according to the company’s most recent earnings report. Strong initial demand typically correlates with higher attachment rates for Apple’s services and accessories, creating multiplicative revenue effects throughout the product ecosystem. Apple’s installed base now exceeds 2 billion active devices globally, providing a substantial upgrade pool for new iPhone models.
Future Outlook: Foldable iPhone Anticipation
Looking beyond the current generation, Morgan Stanley analysts express bullish sentiment about iPhone shipments in 2026 and 2027, citing anticipated demand for Apple’s first foldable iPhone expected in September 2026. “iPhones are getting old and Apple’s biggest innovation in years less than 12 months away,” the analysts noted, referencing the long-rumored device that could reinvigorate Apple’s innovation narrative.
The foldable market represents one of the fastest-growing smartphone segments, with Display Supply Chain Consultants projecting 45% year-over-year growth in 2025. Apple’s entry could significantly expand the premium foldable market, similar to how the original iPhone transformed the smartphone industry. Current foldable leaders like Samsung and Huawei have established early market presence, but Apple’s ecosystem integration and brand loyalty position the company to capture substantial market share upon entry.
As Apple navigates the strong iPhone 17 launch while preparing for its foldable future, the company faces both immediate execution challenges and long-term strategic positioning. The current demand strength provides financial momentum for upcoming innovation cycles, while the iPhone Air’s mixed reception offers valuable market feedback for future product segmentation strategies.
