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Oil Price Led Saudi Aramco Stocks to Record Levels, Which Resulted in Its Valuation Surpassing Apple’s
Thanks to the recent increase in oil prices, Saudi Aramco is now the most valuable company in the world, taking the place of Apple. The shares of the largest oil exporter on the planet have reached record levels, allowing the company to reclaim the top spot for the first time since 2020.
According to information from Refinitiv, Saudi Aramco currently has a valuation of about US$ 2.43 trillion, compared to US$ 2.37 trillion for Apple.
Market capitalizations fluctuate quite frequently, given that in January 2022, Apple reached a value of US$ 3 trillion, which represents an unprecedented achievement among global companies, making it the most valuable company on the planet at the beginning of this year.
Saudi Aramco, on the other hand, also secured its lead in 2019, when the Kingdom of Saudi Arabia – which holds 94% of the company – listed 1.5% of its shares in a historic initial public offering, boosting its valuation to US$ 2 trillion.
Recently, however, the latest market movements demonstrate how perspectives have changed for producers of energy and technology.
Increase in Oil Price Is Largely Due to Russia’s Invasion of Ukraine
This year, oil prices have surged to record levels, largely due to the issues related to supply disruptions from Russia since the invasion of Ukraine. As a result, players like Saudi Aramco have been propelled, with a 27% increase in its shares so far.
It is also worth noting that Saudi Aramco’s net income has more than doubled in the past year, amounting to US$ 110 billion, as the resurgent economic activity, following the easing of global pandemic-related restrictions, revived demand for oil.
On the other hand, Apple shares have fallen more than 17% since January. This can be attributed to recent issues in the supply chain, particularly in China, where multiple factories of the company’s suppliers were temporarily caught up in the country’s Covid-19 lockdowns. According to the company’s CEO, Tim Cook, such lockdowns are expected to cost Apple up to US$ 8 billion this quarter.
Cook also added, in a results teleconference, that Apple’s restrictions are primarily centered around the Shanghai corridor.
Dan Ives Expects Supply Chain Concerns to Ease with the Launch of iPhone 14
According to Dan Ives, managing director of equity research at Wedbush Securities, the impact of the lockdowns is a burden for the June quarter, and Apple’s supply chain issues in China will likely remain the biggest concern for investors in the short term. However, he anticipates that these concerns will ease in the second half of the year, given the launch of a new iPhone 14.
Finally, it is important to mention that some analysts do not agree with the comparison between the two companies, as Apple is a company that was created by civilians in a garage in California in 1976, meaning it started from scratch, while Saudi Aramco is a state-owned giant, with only a small amount of shares in circulation.
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