Saudi Aramco Overtakes Apple as the Largest Company Worldwide

The world’s largest oil exporter, Saudi Aramco, beat Apple yesterday to become the most valuable company worldwide. Aramco’s position has been boosted by a rise in oil prices that has buoyed the crude producer while Apple’s share price got affected by the wider US tech selloff.

Aramco Hits $2.4 Trillion Market Capitalization

Yesterday, Aramco traded near its all-time high, with a market capitalization hitting $2.43 trillion. This saw the company’s value surpass Apple for the first time since 2020. Meanwhile, Apple’s stock dropped 5.2 % to $146.50 a share and is now worth $2.37 trillion.

From the chart above, it is clear that Aramco’s share price has been climbing steadily since December 2021. Interestingly, its stock value has jumped almost 30% year to date (YTD). However, Apple’s shares have dropped nearly 16% within the same period, with increasing workers’ unrest and tech stocks decline having a significant impact.

Since 2022 commenced, Saudi Aramco’s market capitalization has risen to $2.45 trillion from $1.90 trillion. Meanwhile, Apple’s value has declined to $2.5 trillion from $2.85 trillion. On January 3, Apple’s market value momentarily surpassed $3 trillion, making it the first company to reach that milestone. However, it failed to retain the level until the end of the trading day.

Consequently, Saudi Aramco is the only non-US company in the top ten market cap rankings. Microsoft, Alphabet, Amazon, Tesla, Berkshire Hathaway, Meta, Johnson & Johnson, and United Health join Apple to complete the list.

Although this role reversal may be temporary, it highlights the power of critical forces at work in the global economy. The sell-off in tech stocks and the rise in oil prices have boosted Aramco’s market worth. 

Crude prices have risen by nearly 60% year on year, owing to increased demand and supply worries stemming from limited production capacity. In April, both global benchmarks, Brent and the West Texas Intermediate posted their fifth straight monthly gain.

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Global Macro Headwinds Causing Weakness in Tech Stocks

The impact of global macro headwinds on Apple and tech stock performance cannot be overemphasized. Rising inflation, the worst in decades, interest rate hikes, the Russia-Ukraine crisis, and China’s ongoing lockdown situation have all positively impacted oil prices. However, they have negatively affected tech stocks.

According to the World Bank,  Brent is anticipated to reach $100 per barrel, its highest level since 2013. This 40% annual increase has been due to trade and production interruptions caused by the Ukraine crisis.

In addition to the Ukraine conflict, oil prices have risen due to concerns about demand in China and tighter US petroleum stocks. Saudi Arabia has continued to consider selling its crude to China in Yuan instead of the US dollars. However, Covid-19 outbreaks and subsequent lockdowns in Beijing have put that in doubt.

Consequently, while the rising oil prices are good for Aramco’s revenues, they have worsened inflation. This has seen prices skyrocket to levels not seen in decades, causing the Federal Reserve to boost interest rates at the quickest pace. As interest rates rise, future revenue flows from technology businesses are devalued, driving down stock prices.

Meanwhile, analysts believe that tech stocks may take a while to recover from their decline. This sentiment is supported by the expected increase in interest rates by the Feds and the Ukraine war seemingly not having an end in sight.

Do you think oil prices will continue to rise and see Saudi Aramco consolidate its position as the most valuable company globally? Let us know your thoughts in the comments below.