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Apple Stock Surges As Record iPhones Sales Defy Supply Chain Woes, Power Crushing Q1 Earnings

Apple surprised even the most hardened of analysts late Thursday with record global sales of $124 billion and Street-topping earnings for its holiday quarter.

Updated at 11:21 am EST

Apple  (AAPL) - Get Apple Inc. Report shares jumped higher Friday as record holiday sales, built off a surge in demand for its signature 5G iPhone, offset concerns for global supply chain disruptions and chip shortages.

Apple earned more than $34.6 billion for the three months ending in December as revenues rose 11.2% from last year to a record $123.95 billion, comfortably topping analysts' estimates. The tally was even more impressive given that the group had warned the supply chain disruptions and chip shortages would take more than $6 billion from the holiday quarter sales tally.

Apple said iPhone revenues rose 9.2% from last year to $71.63 billion, well ahead of the $67 billion Street forecast, while the company's gross margin improved by 160 basis points from the September quarter to 42.8%

Greater China revenues, Apple said, rose 21% from last year's pandemic recovery period to $25.78 billion, while overall services revenues rose 23.9% to $19.52 billion as the company's installed base of devices topped 1.88 billion.

"As expected, in the aggregate, we experienced supply constraints that were higher than the September quarter," CEO Tim Cook told investors on a conference call late Thursday. "This is our eighth quarter reporting results in the shadow of the pandemic. And while I can't say it gets any easier, I can say I'm incredibly proud of the way our teams have come together and continue to innovate on behalf of our customers."

Apple shares were marked 5.8% higher in late-morning trading to change hands at $168.50 each and trim its year-to-date gain to around 7.5%.

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"Despite the component shortages, the company continues to demonstrate the strength of its product ecosystem with broad-based growth across its lineup," said Canaccord Genuity analyst T. Michael Walkley, who carries a 'buy" rating with a $200 price target on Apple stock. 

"iPhone sales remained strong across all regions with 9% YoY revenue growth versus our 7% estimate," he added. "We believe Apple is well-positioned to continue to benefit from the 5G upgrade cycle and anticipate strong overall growth trends as 5G smartphones ramp and its installed base expands with higher-margins services revenue."

Net sales for the Mac were up 25% to $10.85 billion, while wearable, home and accessories sales, which include the AppleWatch, rose 13.3% to $14.7 billion.

The only product line to record a sales decline were iPads, with revenues down 14.1% to $7.25 billion, owing to chip supply constraints.

The Nikkei business newspaper said in early November that iPad production runs are about half of their normal pace over the past two months, owing to Apple's decision to prioritize chips for its new iPhone 13.

Earlier this week, market tracking data from Counterpoint Research said Apple was the top-selling smartphone vendor in China, the world's biggest handset market, over the three months ending in December, with sales boosted by a post-pandemic rebound in demand and the release of its signature iPhone 13 earlier in the autumn.

Apple's smartphone market share, Counterpoint said, reached a record high 23% as unit sales rose 32% from the year-prior period.

Apple launched its new iPhone 13 in late September with a base price of $799, while unveiling higher-priced versions including the iPhone 13 Pro and iPhone 13 Max,