Well, if you ask Morgan Stanley, Apple’s newly-achieved market cap isn’t excessive.

In fact, the firm just raised Apple’s price target to $520—about 3% higher than its Monday close at $503, as analysts at Morgan Stanley wrote in a note Sunday they “believe [Apple] can continue to outperform peers and the S&P 500 in the near-term” as it nears its 4-for-1 stock split next week and the launch of the behemoth’s first 5G iPhone in October, the analysts wrote.

Indeed, Apple’s stock has seen a massive run in the past few months, up roughly 70% this year, and its upcoming 5G launch has some bulls digging their hooves into the ground in anticipation. But after becoming the first company to hit a $2 trillion market cap last week, it’s easy to understand why investors may be asking, is Apple too expensive now?

At over $500 a share, Apple is bumping right up against Wedbush’s Dan Ive’s 12-month price target of $515 per share—but the bull says he can see Apple hitting the $600 mark. Meanwhile, Edward Jones’ Logan Purk believes the stock is “priced appropriately,” but there’s “a lot of optimism priced in,” he tells Fortune.

Identity crisis

Apart from regulatory headwinds or its upcoming product cycle, Apple has been undergoing something of an identity crisis for investors.

Apple is still predominantly a hardware company, with over 70% of its sales from hardware products, Edward Jones’ Purk notes. But at these prices, he says investors are treating Apple like a software company (think: Microsoft) that can take advantage of big trends like work from home and the continual transition to cloud. “All things considered, Apple is a premium brand and deserves a higher multiple than your standard hardware name, but I’m not so sure it deserves a software multiple either,” Purk argues.

At Apple’s current levels, the stock is trading at a next 12 months price-to-earnings ratio of around 35, per Bloomberg data. That’s pricey by any standard, and it also tops software titan Microsoft’s forward P/E of around 33.

Meanwhile, although Apple has long been in the value camp, investors have also begun to treat it like a growth stock: Fortune‘s Shawn Tully recently wrote that, “for investors, the rub is that most of the gigantic spike in Apple’s price that started in mid-2019 wasn’t driven by a rise in profits, but by a leap in what folks and funds are paying for each dollar of those shares––in other words, an explosion in its P/E multiple that’s arguably made this one-time bargain exorbitantly expensive.”

But analysts note that if Apple can keep growing its services business, which recently made up about 22% of the company’s total sales, that “will stoke further optimism among a lot of the bulls out there,” Purk suggests. (Ives predicts services will generate $60 billion in annual revenue next year, and estimates the whole business will be worth over $700 billion.)

A ‘super cycle’ for upgrades?

The biggest reason for investors to be bullish on the stock right now is the imminent upgrade cycle for the iPhone come fall, with the launch of its 5G phone, analysts suggest. Ives believes this year in particular will be what he deems a “super cycle,” with roughly 350 million of the company’s 950 million iPhone users due for an upgrade.

“I believe the Street continues to underestimate the magnitude of this iPhone 12 upgrade cycle,” Ives argues. Overall, Ives estimates there’s demand for about 200 million to 210 million iPhone units going into the 2021 fiscal year, with about half of that coming from iPhone 12.

But it’s also a possible nail-biter: For the stock to go higher (and make it worth it for investors to buy in at that $500 mark), Purk believes “there’s a huge bet that 5G upgrade cycle is massive,” he notes. That bet may not pay off if people want to save money generally amid the pandemic and aren’t looking to buy high-priced 5G phones, he suggests. And Ives concedes the stock has already risen a lot in anticipation of high demand this cycle, and thinks “now it’s really more of an execution story.” The “stock [has] had a massive run, and any bad news, you could see selloffs,” he adds.

Headwinds brewing

One of the big stories for Apple lately is Fortnite creator Epic Games’ lawsuit against Apple’s App Store fees—a key part of the titan’s services business that has long come under fire for antitrust concerns.

But Ives, Purk, and Morgan Stanley analysts don’t see the antitrust challenge as taking a major hit to Apple’s overall business, and argue that while there is some risk of Apple being “attacked on multiple slides,” ultimately, the “outcome being priced in is that investors assume this is settled or it goes away and it’s just business as usual for Apple,” Purk suggests.

Meanwhile, the Trump administration’s ban of Tencent’s hugely popular app WeChat in the U.S. has been a concern for Apple investors—and Apple’s formidable China business (which Morgan Stanley analysts note makes up roughly 20% of the tech titan’s revenue and operating income) could suffer a “detrimental” hit if WeChat were banned on iPhones in China, too, Purk notes.

But in light of reports over the weekend that the administration will still let Apple do business with WeChat in China, analysts like Ives aren’t too worried: “The bark is worse than the bite,” he tells Fortune. Indeed, analysts at Wedbush including Ives wrote in a Monday note that the WeChat ban shouldn’t “negatively impact or disrupt Apple’s iPhone ecosystem” in China—a market they estimate will be 20% of all upgrades in the next 12 to
18 months.

Yet for investors mulling an Apple purchase at $500, Ives says to keep in mind: “The haters are going to continue to hate as the stock continues to move higher, [but] I think it’s a combination of the upgrade cycle, which I think is a true super cycle over the next two years, combined with more monetization of its install base” that will get the stock to his $600 target. “Investors need to view this as a call for the next year rather than for the next few days or months.”