Morgan Stanley on Apple: This company will be competing in markets worth $3.4 trillion

Morgan Stanley analyst Katy Huberty has a new, very bullish note on Apple.

"Apple's ability to charge a premium, grow recurring revenue, and accelerate the pace of category expansion argue for a re-rating more in-line with platform companies, at 18-19x," says Huberty.

She jacked her price target on the stock to $160, up from $133 previously.

She says Apple has the "most valuable technology platform" and it has a strong eco-system to lock-in users. If someone buys an iPhone, then they'll buy an iPad, and a Mac, and whatever else Apple might release.

The most interesting part of Huberty's note is her speculation about how big Apple can become.

To Huberty, the sky is the limit.

She says that by 2020, Apple's products will have a "total addressable market" of $3.4 trillion. In English, that means she thinks Apple will be selling products that are a part of industries with total sales of $3.4 trillion.

How does Apple get there? Through the wearables market, TVs, and cars.

Here are a few charts to explain it.

Huberty says this is how people spend their time. Of this, Apple only captures 33% of our attention. Huberty thinks Apple can grab another 75%.

A large chunk of that time can come through wearable devices like the Apple Watch. The Watch can be a fashion item, it can also be used for fitness, health, and sleep tracking.

Here's a look the wearable market's potential:

Apple sells an Apple TV, but there's opportunity to do more in the TV market. Here's the size of the TV market, per Huberty:

And, finally, there have been a variety of reports about Apple getting into the auto industry. It's a big market for Apple to crack:

Add it all together and this is what you get:

To be clear, Huberty isn't saying that Apple is going to capture all of the value in these markets. She's just noting that Apple has room to grow if it enters these big markets.