Aramco dethrones Apple as most valuable company
Saudi Aramco overtook Apple as the world’s most valuable company, stoked by a surge in oil prices that is buoying the crude producer while adding to an inflation surge throttling demand for technology stocks.
Aramco traded near its highest level on record on Wednesday, with a market capitalisation of about $2.43 trillion, surpassing that of Apple for the first time since 2020. The iphone maker fell 5.2 per cent to close at $146.50 per share, giving it a valuation of $2.37 trillion.
Even if the move proves shortlived and Apple retakes the top spot again, the role reversal underscores the power of major forces coursing through the global economy.
Soaring oil prices, while great for profits at Aramco, are exacerbating rising inflation that is forcing the Federal Reserve to raise interest rates at the fastest pace in decades. The higher rates go, the more investors discount the value of future revenue flows from tech companies and push down their stock prices.
“You can’t compare Apple to Saudi Aramco in terms of their businesses or fundamentals, but the outlook for the commodity space has improved. They’re the beneficiaries of inflation and tight supply,” said James Meyer, chief investment officer at Tower Bridge Advisors.
Earlier this year, Apple boasted a market value of $3 trillion, about $1 trillion more than Aramco’s. Since then, however, Apple has fallen nearly 20 per cent while Aramco is up 28 per cent.
Apple representatives didn’t respond to a request for comment.
With the Fed on pace to further raise rates by at least another 150 basis points this year and with no prospects yet of a resolution for the conflict in Ukraine, it may be a while until tech regains dominance, according to Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder.