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Apple is still not as expensive as the competition. #AAPL

Apple's $ 2 trillion market capitalization makes experts increasingly doubt whether the stock has jumped too fast.

Morgan Stanley is not worried and instead sees the company grow 37% next year thanks to continued service growth and a major iPhone refresh.

The tech giant's recent quarterly report showed strong growth in revenue, cash flow and profits, despite a 1% year-over-year decline in iPhone sales. According to the group led by Katy Huberty, Apple should be valued more as a consumer platform or technology stock than as a cyclical hardware company, as it further diversifies its revenue streams.

However, the company still trades at a cash flow-based discount to peers in both sectors, "which indicates that the stock is less expensive compared to peers and implies that there is more room for growth." , - they added.

How much space Apple can take up depends largely on non-iPhone revenue streams. Morgan Stanley raised its target price for the stock to $ 520 from $ 431 on Sunday, meaning the stock could fall another 5% from Friday's close as investors gauge the sum of Apple's hardware and software units.

According to the bank, even in the baseline scenario, Apple intends to outperform the S&P 500 in the near future. The stock has already gained 72% since the beginning of the year. The upcoming four-to-one split and the upcoming iPhone 5G launch offer opportunities for further growth, the team said.

However, Morgan Stanley sees even more growth potential if Apple makes the perfect wave of iPhone updates and service growth. According to the team, the company's stock will jump to $ 681 next year, provided iPhone updates accelerate and service growth climbs to 21%. The gains in the stock would mean about 37% growth from Friday's close, enough to push Apple towards a $ 2.9 trillion market cap next year.

"Given the greater confidence in the sustainability of long-term growth," investors can value Apple at a premium enough to support such growth, analysts say.

Apple was trading at $ 500.26 a share as of 3:07 pm ET Monday, up about 72% from the previous year.