Apple’s First Price Hike in Seven Years? Morgan Stanley Says All Eyes on iPhone 17 Pricing at Next Week’s Launch Event

With Apple’s highly anticipated fall launch just around the corner, investor attention is shifting beyond the new gadgets themselves to a far more pivotal factor: pricing.

According to market intelligence from Chasing Wind Trading Desk, Morgan Stanley’s September 4 report signals the possibility of Apple implementing its first “moderate price increase” for iPhones in seven years—a move that could act as a powerful catalyst for the company’s share price.

Pricing Strategy in the Spotlight

Analyst Erik W. Woodring forecasts that while the upcoming iPhone 17 series may not deliver major surprises in terms of features, its pricing strategy could steal the show. Instead of simply raising prices for existing configurations, Apple is expected to take a more nuanced approach to lifting its average selling price (ASP).

The first key move: removing the 128GB entry-level option for the iPhone 17 Pro, making 256GB the new base storage. This adjustment would raise the Pro’s starting price to $1,099, up $100 from the iPhone 16 Pro’s $999 starting point.

The second: introducing the sleek new iPhone 17 Air at a starting price of $999 (256GB), which is $100 higher than the iPhone 16 Plus it replaces. A new 1TB variant priced at $1,399 will also be available, matching the high-capacity price of other models.

The Logic Behind the Increase

Morgan Stanley attributes this pricing shift to two main drivers: offsetting higher import tariffs and component costs, and encouraging consumers to opt for higher-tier models through storage configuration changes.

If executed as expected, this strategy could drive Apple’s FY2026 iPhone ASP up by 5% to $939, significantly above the market consensus of a 1% increase to $910. The bank believes current revenue and profit expectations for Apple may be undervalued, potentially making the launch a positive stock catalyst—a break from the typical “sell the news” trend that follows Apple events.

Crucially, the price increases are described as manageable. Spread over a typical two-to-three-year upgrade cycle, they are unlikely to have a substantial negative impact on demand.

What to Expect at the Event

Morgan Stanley anticipates a relatively straightforward lineup reveal: the standard iPhone 17, iPhone 17 Pro/Pro Max, and the all-new ultra-thin iPhone 17 Air featuring a single rear camera and Apple’s custom C1 modem.

Alongside the iPhones, Apple is expected to debut Apple Watch Series 11, Ultra 3, SE 3, and AirPods Pro 3.

Sales Outlook: Conservative but with Upside Potential

Despite the optimistic pricing forecast, both Morgan Stanley and the broader market remain cautious about unit sales, projecting FY2026 iPhone shipments to hold steady at around 236 million units—extending the average upgrade cycle to nearly five years.

However, the report highlights potential upside: a March 2025 survey shows 51% of U.S. iPhone users are “very likely” to upgrade within 12 months, the highest on record. Additionally, 30% expressed strong interest in the ultra-thin model.

The bank does note regional sensitivity to price hikes—July 2025 data from China indicates that a 5% increase could reduce upgrade intent for 25% of consumers. Even so, analysts believe current shipment forecasts lean conservative, with risks skewed toward the upside.

Breaking the “Sell the News” Curse?

Historically, Apple’s iPhone launch events have often triggered short-term share price pullbacks as pre-event optimism fades. But Morgan Stanley argues this year could be different: market consensus currently forecasts just 4% iPhone revenue growth for FY2026—well below the 9% historical average between 2011 and 2020.

If Apple’s pricing strategy plays out as predicted, the launch could exceed these low expectations, prompting analysts to revise earnings forecasts upward. This shift could help drive a year-end rally and break the pattern of post-event declines.

Morgan Stanley concludes:

“If pricing strategy surprises to the upside, the event could become a positive catalyst, driving valuation recovery and earnings upgrades.”

The firm maintains an Overweight rating on Apple with a $240 price target.