Apple to $500

| About: Apple Inc. (AAPL)

Our forecast from October 23, 2009 that Apple's (NASDAQ:AAPL) market share would propel the stock to $500 a share is on track. Back then, with Apple at $205, people assumed we were just as crazy as when we forecast oil to drop to $30 and Bank of America (NYSE:BAC) to rise to $20.

The key takeaway from the recent Apple earnings report (see conference call transcript here) is that seasonality no longer exists for the company. By selling 8.75 million iPhones at the beginning of the year (131% growth), Apple has entered new territory. The fact that this company’s hottest product is an iPhone that needs to be replaced every 18-24 months is a fact that not many analysts have noticed. I realized it when Steve Jobs spent a few minutes at the iPad event explaining that Apple was now the world’s #1 mobile device company.

What does this really mean? It means that the life cycle of products is no longer seven years like it was for the Mac. All these analysts who are saying that the Apple story is all about the Mac are dead wrong. The Apple story is all about this shorter cycle of mobile device replacement combined with consumer loyalty. Never before have we had a mobile device company command loyalty like Apple. The old norm used to be that you would break or lose your cellphone, head down to the Verizon (NYSE:VZ) store and buy whatever new phone was hot that month.

Now, if you’re an iPhone user you head down to AT&T (NYSE:T) and buy another iPhone without even considering the competition. The Apple ecosystem of iTunes and App Store is too convenient.

Over the next 18 months, Apple will trade like Google (NASDAQ:GOOG) did in its early years and like Baidu (NASDAQ:BIDU) trades now. $300 a share will arrive much sooner than anticipated as will $400. The halo effect of iPod, Mac, iPhone, and iPad are all working in tandem to create a critical mass like this world has never seen. The #1 mobile electronics device company in the world will grow to command an all-time record breaking market cap; as they should.

We're living in the middle of a technological revolution and Apple certainly will end up crushing the market cap of Exxon (NYSE:XOM).

Disclosure: Author holds a long position in AAPL