AI Giants or Small-Cap Recovery? ETFs to Monitor as Morgan Stanley Targets S&P 500 at 7,800
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Nov 19 2025
0mins
Should l Buy AAPL?
Source: Benzinga
Morgan Stanley's Forecast: Morgan Stanley has raised its year-end 2026 forecast for the S&P 500 to 7,800, citing stronger earnings and productivity gains from AI adoption, while UBS expects the index to reach 7,500 by the end of 2025.
Market Dynamics: The bank predicts a two-speed market rally, with mega-cap tech stocks leading the AI boom and small caps potentially outperforming as the Fed cuts rates and business confidence improves.
ETF Opportunities: Key ETFs like the Technology Select Sector SPDR Fund (XLK) and iShares Russell 2000 ETF (IWM) are positioned to benefit from the expected surge in capital expenditures and small-cap growth.
Equal-Weight Strategies: Equal-weight ETFs, such as Invesco S&P 500 Equal Weight ETF (RSP), may provide balanced exposure and reduce concentration risk, appealing to investors looking to capitalize on both tech leadership and small-cap recovery.
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Analyst Views on AAPL
Wall Street analysts forecast AAPL stock price to rise
27 Analyst Rating
17 Buy
9 Hold
1 Sell
Moderate Buy
Current: 251.490
Low
239.00
Averages
306.89
High
350.00
Current: 251.490
Low
239.00
Averages
306.89
High
350.00
About AAPL
Apple Inc. designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories, and sells a variety of related services. Its product categories include iPhone, Mac, iPad, and Wearables, Home and Accessories. Its software platforms include iOS, iPadOS, macOS, watchOS, visionOS, and tvOS. Its services include advertising, AppleCare, cloud services, digital content and payment services. The Company operates various platforms, including the App Store, that allow customers to discover and download applications and digital content, such as books, music, video, games and podcasts. It also offers digital content through subscription-based services, including Apple Arcade, Apple Fitness+, Apple Music, Apple News+, and Apple TV+. Its products include iPhone 16 Pro, iPhone 16, iPhone 15, iPhone 14, iPhone SE, MacBook Air, MacBook Pro, iMac, Mac mini, Mac Studio, Mac Pro, iPad Pro, iPad Air, AirPods, AirPods Pro, AirPods Max, Apple TV, Apple Vision Pro and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Apple's Services Revenue Continues to Grow
- Increased User Spending: Evercore ISI's survey indicates that the average monthly spend of Apple users has risen to approximately $13 from a three-year average of $9, reflecting a growing acceptance of high-value services and driving overall revenue growth for Apple's services.
- Higher Adoption of AppleCare and Apple One: The survey reveals that about 63% of respondents now have AppleCare or Apple One, a significant increase from the three-year average of 44%, indicating a deeper trust and reliance on Apple's service offerings among users.
- Rising Apple Pay Usage: Approximately 40% of respondents reported using Apple Pay, up from a three-year average of 30%, suggesting that Apple's market penetration in mobile payments is strengthening, which further enhances the profitability of its ecosystem.
- Underappreciated AI Potential: Although around 44% of users expressed willingness to upgrade for AI features, this represents a ~2-point decline from the previous survey, indicating a lack of recognition of the potential value of Apple's intelligent assistant, with upcoming new features likely to shift this perception.
See More
Apple Launches Enterprise Platform Apple Business
- Platform Integration: Apple launched the Apple Business platform on Tuesday, which integrates key services such as mobile device management, employee group configuration, device settings, security, and apps, aimed at helping businesses of all sizes operate efficiently and grow.
- Storage and Services: Employee accounts receive 5GB of free iCloud storage, with additional storage up to 2TB available for $0.99 per user per month, while AppleCare+ for Business costs $6.99 per device or $13.99 per user for up to three devices, enhancing service assurance for enterprises.
- New Advertising Opportunities: The new platform allows businesses in the U.S. and Canada to place ads in the Apple Maps app, with ads appearing at the top of user search results, clearly marked, thereby increasing business visibility and customer acquisition potential.
- Privacy Protection Commitment: Apple emphasized that user location and ad interaction data will not be linked to Apple accounts, with all data remaining on user devices and not collected or shared by Apple, further enhancing user trust in the platform.
See More
Foreign-Branded Phone Shipments in China Decline
- Decline in Shipments: According to data from the China Academy of Information and Communications Technology, foreign-branded phone shipments in China fell 7.7% year-over-year in February to 2.4 million units, indicating weak market demand that could impact brand market shares.
- Overall Market Contraction: The total phone shipments in China dropped 14.6% year-over-year in February to 16.8 million units, reflecting a decline in consumer demand for new phones, which may put additional sales pressure on manufacturers.
- Apple's Sales Contrast: Despite the overall market decline, a report from Counterpoint Research indicates that Apple's iPhone sales surged 23% year-over-year in the first nine weeks of 2026, demonstrating Apple's strong competitiveness in the high-end market, potentially attracting more consumers.
- Price Increase Expectations: With rising memory prices, phone manufacturers are planning to increase prices, which may further affect consumer purchasing decisions and intensify market competition, particularly in the sales of foreign-branded phones.
See More
Future Outlook and Investment Strategies for AI Stocks
- AI Market Growth: Over the past few years, AI stocks have propelled the S&P 500 higher, particularly companies like Nvidia, CoreWeave, and Nebius, which have achieved explosive revenue growth in double and triple digits through AI tool sales, highlighting the immense potential and market demand for AI technology.
- Investor Rotation: Despite recent volatility in AI stocks, investors may shift towards companies that have underperformed in the AI sector but possess broader business operations, such as Apple, Microsoft, Amazon, and Oracle, which not only rely on AI growth but also generate stable revenue from other areas.
- Apple's Potential: After launching AI features in 2024, Apple may benefit from increased customer engagement with its devices, and although it entered the AI market later, its loyal customer base and ongoing service growth will support future expansion.
- Safety of Market Giants: Cloud computing giants like Microsoft, Amazon, and Oracle are favored by investors due to their diversified revenue streams, which provide a sense of security amid geopolitical and economic uncertainties, allowing them to capitalize on the surging demand for AI while mitigating risks.
See More
AI Stocks Face Short-Term Setbacks but Long-Term Growth Story Remains Strong
- AI Market Dynamics: Despite recent fluctuations in AI stocks, the long-term growth narrative remains intact, particularly as companies like Nvidia, CoreWeave, and Nebius have generated billions in revenue from AI tool sales, indicating sustained market demand for AI technology.
- Shift in Investor Focus: Investors may pivot towards companies that, while not leading in AI, have broader business operations, such as Apple, Microsoft, Amazon, and Oracle, whose strong growth in cloud computing and other sectors will provide additional security amid market uncertainties.
- Apple's Potential: Following its late entry into the AI market with the launch of AI features in 2024, Apple may benefit from increased customer engagement with its devices, as its loyal customer base and ongoing service growth are expected to support future revenue increases.
- Market Uncertainty: Given geopolitical and economic concerns, investors may prefer companies that generate revenue from diverse business areas to mitigate reliance on AI growth, thereby maintaining stability during potential market fluctuations.
See More
Opportunities in Investing During Uncertainty
- Market Volatility Impact: Geopolitical conflicts have led to significant market volatility, with the S&P 500 dropping approximately 5-10% during the 2022 Russia-Ukraine war, resulting in an estimated $1.3 trillion loss for the global economy, highlighting the profound impact of war on economic stability.
- Historical Recovery Patterns: Despite initial declines, historical data shows that many markets recover a substantial portion of their losses within a year, with sectors like energy, defense, and commodities delivering strong returns, indicating opportunities for long-term investors to accumulate assets at lower valuations during downturns.
- Asset Allocation Strategy: Given the current geopolitical tensions in the Middle East and inflation concerns, investors are advised to diversify across multiple asset classes, particularly in stocks from sectors like defense, energy, and infrastructure, which tend to perform relatively better during market downturns.
- Safe-Haven Role of Gold and Commodities: Gold and commodities typically perform well during geopolitical uncertainty and inflationary periods, with rising oil prices and increased demand for safe-haven assets like gold and silver in 2026, underscoring the importance of diversification in uncertain environments.
See More
Apple's Services Revenue Continues to Grow
- Increased User Spending: Evercore ISI's survey indicates that the average monthly spend of Apple users has risen to approximately $13 from a three-year average of $9, reflecting a growing acceptance of high-value services and driving overall revenue growth for Apple's services.
- Higher Adoption of AppleCare and Apple One: The survey reveals that about 63% of respondents now have AppleCare or Apple One, a significant increase from the three-year average of 44%, indicating a deeper trust and reliance on Apple's service offerings among users.
- Rising Apple Pay Usage: Approximately 40% of respondents reported using Apple Pay, up from a three-year average of 30%, suggesting that Apple's market penetration in mobile payments is strengthening, which further enhances the profitability of its ecosystem.
- Underappreciated AI Potential: Although around 44% of users expressed willingness to upgrade for AI features, this represents a ~2-point decline from the previous survey, indicating a lack of recognition of the potential value of Apple's intelligent assistant, with upcoming new features likely to shift this perception.
See More
Apple Launches Enterprise Platform Apple Business
- Platform Integration: Apple launched the Apple Business platform on Tuesday, which integrates key services such as mobile device management, employee group configuration, device settings, security, and apps, aimed at helping businesses of all sizes operate efficiently and grow.
- Storage and Services: Employee accounts receive 5GB of free iCloud storage, with additional storage up to 2TB available for $0.99 per user per month, while AppleCare+ for Business costs $6.99 per device or $13.99 per user for up to three devices, enhancing service assurance for enterprises.
- New Advertising Opportunities: The new platform allows businesses in the U.S. and Canada to place ads in the Apple Maps app, with ads appearing at the top of user search results, clearly marked, thereby increasing business visibility and customer acquisition potential.
- Privacy Protection Commitment: Apple emphasized that user location and ad interaction data will not be linked to Apple accounts, with all data remaining on user devices and not collected or shared by Apple, further enhancing user trust in the platform.
See More
Foreign-Branded Phone Shipments in China Decline
- Decline in Shipments: According to data from the China Academy of Information and Communications Technology, foreign-branded phone shipments in China fell 7.7% year-over-year in February to 2.4 million units, indicating weak market demand that could impact brand market shares.
- Overall Market Contraction: The total phone shipments in China dropped 14.6% year-over-year in February to 16.8 million units, reflecting a decline in consumer demand for new phones, which may put additional sales pressure on manufacturers.
- Apple's Sales Contrast: Despite the overall market decline, a report from Counterpoint Research indicates that Apple's iPhone sales surged 23% year-over-year in the first nine weeks of 2026, demonstrating Apple's strong competitiveness in the high-end market, potentially attracting more consumers.
- Price Increase Expectations: With rising memory prices, phone manufacturers are planning to increase prices, which may further affect consumer purchasing decisions and intensify market competition, particularly in the sales of foreign-branded phones.
See More
Future Outlook and Investment Strategies for AI Stocks
- AI Market Growth: Over the past few years, AI stocks have propelled the S&P 500 higher, particularly companies like Nvidia, CoreWeave, and Nebius, which have achieved explosive revenue growth in double and triple digits through AI tool sales, highlighting the immense potential and market demand for AI technology.
- Investor Rotation: Despite recent volatility in AI stocks, investors may shift towards companies that have underperformed in the AI sector but possess broader business operations, such as Apple, Microsoft, Amazon, and Oracle, which not only rely on AI growth but also generate stable revenue from other areas.
- Apple's Potential: After launching AI features in 2024, Apple may benefit from increased customer engagement with its devices, and although it entered the AI market later, its loyal customer base and ongoing service growth will support future expansion.
- Safety of Market Giants: Cloud computing giants like Microsoft, Amazon, and Oracle are favored by investors due to their diversified revenue streams, which provide a sense of security amid geopolitical and economic uncertainties, allowing them to capitalize on the surging demand for AI while mitigating risks.
See More
AI Stocks Face Short-Term Setbacks but Long-Term Growth Story Remains Strong
- AI Market Dynamics: Despite recent fluctuations in AI stocks, the long-term growth narrative remains intact, particularly as companies like Nvidia, CoreWeave, and Nebius have generated billions in revenue from AI tool sales, indicating sustained market demand for AI technology.
- Shift in Investor Focus: Investors may pivot towards companies that, while not leading in AI, have broader business operations, such as Apple, Microsoft, Amazon, and Oracle, whose strong growth in cloud computing and other sectors will provide additional security amid market uncertainties.
- Apple's Potential: Following its late entry into the AI market with the launch of AI features in 2024, Apple may benefit from increased customer engagement with its devices, as its loyal customer base and ongoing service growth are expected to support future revenue increases.
- Market Uncertainty: Given geopolitical and economic concerns, investors may prefer companies that generate revenue from diverse business areas to mitigate reliance on AI growth, thereby maintaining stability during potential market fluctuations.
See More
Opportunities in Investing During Uncertainty
- Market Volatility Impact: Geopolitical conflicts have led to significant market volatility, with the S&P 500 dropping approximately 5-10% during the 2022 Russia-Ukraine war, resulting in an estimated $1.3 trillion loss for the global economy, highlighting the profound impact of war on economic stability.
- Historical Recovery Patterns: Despite initial declines, historical data shows that many markets recover a substantial portion of their losses within a year, with sectors like energy, defense, and commodities delivering strong returns, indicating opportunities for long-term investors to accumulate assets at lower valuations during downturns.
- Asset Allocation Strategy: Given the current geopolitical tensions in the Middle East and inflation concerns, investors are advised to diversify across multiple asset classes, particularly in stocks from sectors like defense, energy, and infrastructure, which tend to perform relatively better during market downturns.
- Safe-Haven Role of Gold and Commodities: Gold and commodities typically perform well during geopolitical uncertainty and inflationary periods, with rising oil prices and increased demand for safe-haven assets like gold and silver in 2026, underscoring the importance of diversification in uncertain environments.
See More
