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Apple Stock Extends Gains, With $3 Trillion Value in Sight, As Nikkei Reports iPhone Production Slump

Apple's iPhone 13 production has fallen some 20% south of its previous targets, the Nikkei business newspaper reported late Tuesday, amid chip shortages and supply chain disruptions.

Apple  (AAPL) - Get Apple Inc. Report shares bumped higher Wednesday amid reports that the tech giant fell far short of its iPhone production targets earlier this fall, owing to chip shortages and ongoing disruptions in global supply chains.

The Nikkei business newspaper said Apple is likely to produce between 83 million and 85 million of its new iPhone 13 range before the end of the year, a tally that would fall around 20% shy of its initial target. Its overall goal of making 230 million iPhones is also at risk, the paper reported, even as it prioritizes chips from iPad assemblies in order to meet smartphone demand into the holiday season.

Bloomberg News reported last week that Apple is instructing vendors to prepare for tamer holiday sales thanks in part to Omicron concerns, delivery delays and the broader impact on consumer spending from the highest levels of domestic inflation in more than 30 years.

Morgan Stanley analyst Kathy Huberty, however, shrugged-off  those concerns in report published Tuesday that lifted her rating on the tech giant to a Wall Street high $200 per share, arguing that handset and App Store revenues could surprise to the upside in the December quarter.

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"Our checks indicate iPhone production is surprising to the upside as Apple hasn't experienced the same level of manufacturing disruptions as in the September quarter," Huberty said. "While upward trending COVID cases are worth monitoring given they could create new production bottlenecks, we view supply upside as a driver of better December quarter iPhone results."

Apple shares were marked 1.95% higher in afternoon trading Wednesday to change hands at $174.87 each. The stock hit an intra-day record high of $171.63 earlier in the session, giving Apple a market value of around $2.86 trillion.

Apple said profits for the three months ending in September, the tech giant's fiscal fourth quarter, were pegged at $1.24 per share, up 70% from the same period last year and bang in line with the Street consensus forecast, even as supply chain disruptions ripped $6 billion from its overall sales tally of $83.4 billion.

Apple's holiday quarter sales will also be hit by the chip shortage, CEO Tim Cook said in late October, telling Reuters that "we're doing everything we can do to get more (chips) and also everything we can do operationally to make sure we're moving just as fast as possible."

Still, CFO Luca Maestri told investors on a conference call that December quarter sales would be "very solid", and likely hit a record high, with gross margins in the region of 41.5% to 42.5%.