Apple poised to overtake the value of the entire FTSE 100

Apple is set to overtake the value of the entire FTSE 100 “within weeks” after becoming America’s first $2 trillion company, analysts said today.

The tech giant yesterday was briefly valued at $2trn — while collectively the UK’s 100 largest listed companies are worth around $2.21trn. In sterling, the FTSE 100 is valued at £1.7trn, against Apple’s £1.5trn.

Apple has seen its shares surge since the Covid outbreak saw investors pile into a clutch of US tech stocks delivering services and entertainment in lockdown. The company is expected to benefit from the rollout of 5G iPhones and its move towards offering services, such as Apple Music and iCloud, as well as manufacturing products.

David Madden, markets analyst at CMC Markets, said: “Apple’s shares have rallied recently as demand for iPhones and their other products remains robust.

“The group is shrewdly pivoting away from products, and it is deriving a higher portion of their revenue from services, and that area of the business might be the majority revenue earner within a few years.”

Neil Wilson, an analyst at Markets.com said, after Apple’s valuation went from $1 trillion to $2 trillion in a year, that it could “match the FTSE in a week or two”. He added that, although Apple’s balance sheet strength is a virtue, its dividend yield of 0.7% is weak against 3.77% for the FTSE 100.

Wilson said: “Apple has done well because it’s created a brand with immense power and I think investors have really bought into the pivot towards Services to generate more sustainable revenues than being a pure play hardware manufacturer, which has taken place under Tim Cook. The upcoming rollout of 5G iPhones is also very much in the equation.

“It has a rock solid balance sheet and is in the FAANGs that have benefitted most from the pandemic due to the work from home trend. I also think we could throw in the upcoming stock split as a factor as despite the fact it ought not to matter to the share price, it will undoubtedly make it easier for retail investors – a growing crop of US day traders – to buy the shares. I’d park the money in both, but the FTSE offers a greater income at current levels – even after a massive cut in dividends.”

The FTSE is dominated by well-established behemoths with pharmaceutical firms AstraZeneca and GlaxoSmithKline, lender HSBC, drinks giant Diageo and tobacco firm BAT make up a fifth of its value.

AJ Bell investment director Russ Mould said: “The FTSE 100 is full of plodders like oils, banks, utilities and volatile stuff like miners and so deserves a fairly low overall valuation multiple.”