This Oil Giant Just Overtook Apple as the World’s Most Valuable Company
With oil prices continuing to rise, oil giant Saudi Aramco has seen its valuation soar to more than $2.4 trillion.
Just a few years ago, it would have been absurd to think that an oil company would supplant Apple as the world’s most valuable company, but what a difference a year can make.
With electric cars becoming increasingly available to the mainstream consumer and clean energy alternatives replacing oil at accelerating rates, it seemed like oil-burning engines would be the latest legacy technology to be made obsolete by superior technology.
The world now runs on cell phones, and Apple (NASDAQ: AAPL) is the largest provider. Apple users are more than consumers, as there is a certain “members only” feeling to being a part of their ecosystem. The company’s position as the world’s most valuable company seemed all but solidified. However, the COVID-19 pandemic, the war in Ukraine and the associated disruptions to global supply chains have affected Apple’s business to a significant degree. This has resulted in Apple losing 18% of its market cap since it peaked in December of last year.
Meanwhile, Russia’s invasion of Ukraine has disrupted the global energy market. Other producers stand to benefit from the situation, as they can step in and fill the gap left by European countries’ boycott of Russian energy. The largest beneficiary, and the new most valuable company on Earth, is Saudi Aramco (Tadawul: 2222).
Formerly owned by the Saudi royal family, Saudi Aramco is the world’s largest oil company by revenue ($622 billion in 2021). To diversify their portfolio and reduce their reliance on oil, the royal family decided to take Saudi Aramco (TADAWUL: ARAMCO) public in late 2019. After a rough 2020, thanks to COVID-19 reducing the global oil demand, the company has been rebounding over the last two years.
The war in Ukraine gave a boost to Saudi Aramco’s stock price. Savvy investors realized quickly that the company stood to benefit from Russia’s war. Combined with Apple’s fall, investors bidding up Saudi Aramco’s market cap to more than $2.43 trillion caused the company to leapfrog Apple ($2.37 trillion) as the most valuable company globally.
Whether Saudi Aramco can hold its position will largely depend on whether tech can rebound and if Saudi Aramco can continue to benefit from the war in Ukraine. When that conflict ends and energy markets stabilize, it will be interesting to see if investors stick with the oil firm.
Shares of Saudi Aramco last traded at SAR $41.20 per share, down 3.06% on the day. YTD, ARAMCO stock is up +27.48%.
Shares of Apple are currently changing hands at USD $148.26 per share, up 1.87 on the day. YTD, AAPL stock is down 18.55%.
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