Apple's (NASDAQ:AAPL) latest earnings call was a mixed bag for investors. The tech giant posted a record $94.9 billion in Q4 revenue, up 6% year-over-year, with adjusted EPS climbing 12% after excluding one-time charges. Operating cash flow hit a hefty $27 billion, underscoring Apple's strength in converting sales into cash, which allowed it to return over $29 billion to shareholders. This level of cash generation signals Apple's staying power, even as it rolls out new product lines and a much-anticipated privacy-centered AI tool, Apple Intelligence.

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Still, the market reacted with a 2% dip premarket. Analysts at Morgan Stanley kept their Overweight rating on Apple, pointing out that while guidance is conservative, the upside potential is significant. Their $273 price target rests on Apple's ability to sustain high gross margins and lock in strong demand for its upgraded iPhone line. Morgan Stanley's team noted that Apple Intelligence could become a key driver, setting Apple up for a decisive December quarter if consumers respond well to the AI's privacy-first appeal.

Looking forward, Apple's conservative Q1 guidance could leave room for an upside surprise, particularly if product adoption continues at this pace. BofA Securities shares this optimism, projecting gross margins of 46-47% on favorable component costs and high iPhone demand. With a strategic upgrade cycle and robust cash flow, Apple is poised to not just navigate headwinds but leverage them, keeping shareholders positioned to benefit from what looks like a disciplined, long-term growth story.

This article first appeared on GuruFocus.