The Saudi Arabian oil and gas giant Aramco has regained the title of the most valuable company in the world, due to the combination of a broad sell-off of technology stocks and the increasing price of oil.
Aramco had held the top spot before being unseated by the iPhone maker in 2020. However, with shares in Apple having plummeted by about 5% in a single day on Wednesday, and almost 20% since the start of 2022, the Saudi firm has now reclaimed the number one position.
As reported by the BBC and elsewhere, Apple ended the trading day in New York on Wednesday with a $2.37 trillion stock market valuation, which placed it shy of Aramco’s $2.42 trillion value. Indeed, Aramco’s stock is reported to have increased by over 27% so far in 2022, while escalating oil prices allowed the Saudi firm to double its profits last year.
It looks like investors have recently come to see energy producers as representing a safer bet than technology companies – hence a broader trend of shares in the latter being sold off, and Apple has been unable to escape the impacts of this.
Still, it’s worth pointing out that Apple is hardly in ill health; just two weeks ago, the Cupertino firm reported that it had generated $97.3 billion in revenue during the second quarter, equating to a new all-time record for the month of March.
However, this latest development is a high-profile indicator of the international turbulence that tech companies have recently had to deal with.
Backing up this sentiment, the supply chain analyst Ming-Chi Kuo stated last week that he saw no “reason to be optimistic about the outlook for consumer electronics demand” in the second half of 2022, adding: “It is reasonable to assume that demand from Russia and Ukraine will almost wholly disappear.”
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From the systemic risk perspective, I can't find any reason to be optimistic about the outlook for consumer electronics demand in 2H22. It is reasonable to assume that demand from Russia and Ukraine will almost wholly disappear.— 郭明錤 (Ming-Chi Kuo) (@mingchikuo) May 6, 2022
Kuo suggested that increasing food prices and energy costs, and the impacts of the global recession, would spell bad news for demand in the European and United States markets as well.
