The Apple logo is seen on the window at an Apple Store on January 7, 2019 in Beijing, China.

Apple has made quite a comeback since it reported better-than-feared earnings, but many investors have little faith that the iPhone-maker can return to a $1 trillion market value with slowing smartphone demand.

Morgan Stanley, however, disagrees.

In fact, the bank said life beyond iPhone could extend last week's 7 percent relief rally to another 27 percent gain from here this year. A slew of new services launching in 2019, including video streaming and a media bundle will be a big driver for Apple, according to Morgan Stanley's Katy Huberty.

Apple plans to debut its video streaming service this spring, and Morgan Stanley expects the tech giant to introduce a "media bundle," which contains video streaming, Apple Music and the Texture news app. Huberty said in a note on Thursday that an expansion of Apple's payments and advertising business is also on the horizon, she added.

The media bundle could add about 2 percentage points annually to services revenue growth through 2025, helping to drive a 5 percent revenue and 12 percent earnings per share (EPS) annual growth rate through 2023, Huberty said.

Apple reported earnings for its December quarter Tuesday that largely fell in line with expectations. The results were better than feared, as the tech giant had lowered revenue projections for the quarter on a sales slowdown in China.

That knocked 10 percent off the stock on the day of the warning. However, shares of Apple have risen more than 7 percent since the release of the earnings.

While Apple's warning earlier this month of weaker iPhone sales sparked wild concerns about the iPhone-maker's market saturation and smartphone's profitability, Morgan Stanley interprets it as stabilization.

"iPhone replacement cycles now stand at mature levels suggesting a stabilization of growth is in the cards over the next year. Management's commentary that demand improved in January is similarly encouraging," Huberty said.

The bank set its 12-month price target for Apple at $211, which is 27 percent higher than Friday's closing price.

In addition, the bank is foreseeing more share repurchases from Apple this year, which could offer additional support to the stock prices.

"After repurchasing $8.8 billion of stock in the December quarter, below the prior $20 billion run-rate, we see a more active buyback program helping re-rate shares, as investors better understand the stabilization path for iPhone and impact of new services," Huberty said.

– CNBC's Michael Bloom contributed to this report.