Shares in Apple, the world's most valuable technology company, shot up 8 percent in after-hours trade, after falling as much as 13 percent from a record high of $644 in the past two weeks.

The results prompted a slew of analysts to raise their target price for Apple.

Apple sold 35.1 million iPhones - which account for about half its revenue - in the quarter, outpacing around 30 million expected by Wall Street analysts. Pent-up demand for the iPhone 4S helped lift revenue for China, Taiwan and Hong Kong five-fold.

"The room to grow in China is still very large, especially because Apple hasn't started working with China Mobile. Once they start cooperation, it'll keep the growth momentum going even in Q2 when global iPhone 4S sales are expected to drop," said Mike Fang, a fund manager at Paradigm Asset Management based in Taipei.

China Mobile, the world's largest mobile operator by subscribers, is the only Chinese carrier that does not have a contract with Apple to sell iPhones.

"Right now, Apple stores are only open in first-tier cities in China, so there's still a lot of room to expand."

Net income rose to $11.6 billion, or $12.30 a share, from $6 billion, or $6.40 per share, a year earlier, outpacing a Thomson Reuters I/B/E/S consensus estimate of $10.04 a share.

Analysts noted that margins had also increased beyond expectations, despite some concerns they could suffer if Apple sold more older models to ward off competition from lower priced Google Inc Android phones - made by the likes of Motorola Mobility and Samsung Electronics.

"That shows they are able to maintain their pricing without compromising on growth," said Morningstar analyst Michael Holt.

Fiscal second-quarter revenue jumped to $39.2 billion, 59 percent more than a year earlier and 6.5 percent higher than analysts' average forecasts.

Helped by lower-than-expected commodity costs, gross margins climbed to 47.4 percent from 41.4 percent a year earlier, above Wall Street's average forecast of 42.8 percent.

"International iPhone sales were on fire," Apple Chief Financial Officer Peter Oppenheimer told Reuters in an interview, noting the five-fold increase in Greater China sales to $7.9 billion.

But sales of the iPad, the latest version of which hit store shelves in mid-March, came in at 11.8 million iPads, below an average forecast of up to 13 million.

"There's no doubt looking in the last quarter and the Christmas season, Apple has executed very well. But you are starting to see the iPad ... reach some sort of saturation with the current product," said Patrick Becker, a principal at Becker Capital Management, which does not own Apple shares.

The results came after its shares - long considered a must-have in most U.S. equity portfolios - declined over the past couple of weeks in unusually volatile trading, as investors fretted over potential competitive and pricing pressures.

Responding to concerns that wireless carriers may reduce subsidies for the iPhone, thereby lowering Apple's profit margin, Chief Executive Tim Cook said the subsidies aren't large when compared with what carriers can recoup from consumers over a 24-month contract period.

So-called churn, or the rate that customers switch from the iPhone to other models, is the lowest of any phone they sell, which has a "significant, direct financial benefit to the carrier," Cook added.

As for patent litigation battles with rivals, Cook said he preferred to settle if Apple could get a fair settlement. The company is fighting court battles with several Android phone makers, including Samsung, HTC Corp and Motorola in the United States and other countries.

The company, which has said it will finally begin sharing its record cash hoard with investors via a quarterly dividend, added that $74 billion of its $110 billion in cash and securities was now parked outside the United States as of March 31.

Apple's stock gained to $603.81 from a close of $560.28 on the Nasdaq but is still far below an intraday high of $644 marked this month. Brokerages raising their target prices on the stock included Citigroup, which lifted its target to $720 from $700.

"When you have a strong rally in a stock it often sells off for no better reason than uncertainty. I think you're going to see the naysayers go away," said Michael Yoshikami, chief executive of Destination Wealth Management.

(Additional reporting by Liana Baker, Noel Randewich, Alistair Barr and Clare Jim; Editing by Edwina Gibbs and Jean Yoon)

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