Supported by surging oil prices amid the war in Ukraine, Saudi Aramco has toppled Apple as the most valuable company globally as surging oil prices drove up shares and tech stocks slumped.
The Saudi Arabian oil company’s market capitalization stood at $2.426 trillion, overtaking Apple’s $2.415 trillion by a margin of more than $10 billion.
This is the first time Saudi Aramco has reclaimed the top rank since 2020, and it comes after a year-long sell-off in technology stocks.
Early this year, Apple became the first company to reach a market capitalization of $3 trillion. Its stocks fell in the last few months amid concerns over investors reconsidering the company’s valuation as the US FED’s tightening and concerns that inflation will weaken consumers’ spending habits.
The crashing of share price came despite Apple reporting better-than-expected profits in the first three months of this year amid strong consumer demand.
But Apple warned that the China COVID-19 lockdown and ongoing supply chain woes would dent June quarter results by $4 to $8 billion. Most of suppliers in China has downed shutters due to COVID-19 relared issues in China.
“Supply constraints caused by COVID-related disruptions and industry-wide silicon shortages are impacting our ability to meet customer demand for our products,” Chief Financial Officer Luca Maestri said.
The results looked good following stumbles by some big tech peers as growth from the stay-at-home demand amid the pandemic slows and companies confront rising operating and labor costs.
Oil giant Saudi Aramco recently reported a 124% net profit surge for last year, hours after Yemen’s Iran-backed Houthi militia attacked its facilities causing a “temporary” drop in production.
Net Income Grows
As the world economy started to rebound from the COVID-19 pandemic, “Aramco’s net income increased by 124% to $110 billion in 2021, compared to $49 billion in 2020,” the company said.
Saudi Arabia, one of the world’s top crude exporters, has been under pressure to raise output as Russia’s invasion of Ukraine and subsequent sanctions against Moscow have pushed up global energy markets.
Aramco president and CEO Amin Nasser cautioned that the company’s outlook remained uncertain due in part to geopolitical factors.
“We continue to make progress on increasing our crude oil production capacity, executing our gas expansion program and increasing our liquids to chemicals capacity,” Nasser said.
On the results, for 2021, he acknowledged that economic conditions have improved considerably. A strong rebound last year saw demand for oil increase and prices recover from their 2020 lows.
Inflation could cause a drop in consumption, reducing demand for oil, while tech shares could continue to be dragged down by investor concerns over company costs, interest rate rises and supply chain woes.