On January 3, 2022, Apple’s stock price hit a record high and it became the first company with a market value of over 3 trillion US dollars. At that time, the media compared this value with the GDP of various countries in the world in 2020. The United Kingdom, after Germany, is the fifth largest economy in the world. But Apple has suffered from a sell-off in U.S. stocks, with its shares down about 16 percent so far this year.

However, due to a series of effects such as the conflict between Russia and Ukraine and the global tightening of monetary policy in response to inflation, Saudi Aramco, the world’s largest oil company, will rise by 28% in 2022, replacing Apple as the world’s largest company by market value.

In Wednesday’s session, Saudi Aramco’s shares hit an all-time high with a market value of about $2.43 trillion, surpassing Apple’s for the first time since 2020; Apple fell 4.4% to $147.53, with a market value of $2.38 trillion , and the daily decline continued to expand.

In fact, Saudi Aramco briefly surpassed Apple on Tuesday at a price of 45.95 Saudi riyals ($12.25) per share, bringing its market value to 9.19 trillion riyals ($2.45 trillion). However, Apple closed up 1.6% on Tuesday to close at $154.51 per share, with a market value of $2.5 trillion, temporarily stabilizing its global No. 1 position.

Despite Apple’s solid performance, which is expected to earn $6.15 per share in fiscal 2022 and total earnings of about $100 billion, Saudi Aramco made $32 billion in the fourth quarter of 2021, when oil prices were about $5 below current levels, The output is also lower, but after all, it is no match for the “general trend”.

While the change of ownership of the world’s most valuable company may be short-lived, it does highlight a shift in major forces in the global economy. Soaring oil prices, while good for the profits of energy companies, have also fueled inflation further, forcing the Federal Reserve to raise interest rates at the fastest pace in decades. And the higher the interest rate, the more investors discount the value of the tech company’s future revenue streams, driving down its stock price.

The weakness in tech stocks has been fueled by concerns about global inflationary pressures and global economic expectations, and according to Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, “it may be a while before tech stocks regain their dominance.”

James Meyer, chief investment officer at Tower Bridge Advisors, said:

You can’t compare Apple to Saudi Aramco in terms of business or fundamentals, but the outlook has improved in the commodities space, which is a beneficiary of inflation and tight supply.

Oil prices boost, Saudi Aramco becomes market favorite

Saudi Aramco’s market capitalization has been buoyed by a recent massive sell-off in U.S. stocks and a surge in oil prices. Crude prices have risen about 60% since last year on concerns about a shortage of crude due to rising demand and limited capacity in producers. In April, both Brent and WTI rose for a fifth straight month. Vijay Valecha, Chief Investment Officer of Century Financial, said:

Oil prices have remained encouraged since the European Union proposed a phased embargo on Russian oil. However, ratification was delayed amid requests from Eastern European member states for exemptions and concessions.

Once the EU confirms the ban on Russian oil in its sixth sanctions package, European countries will turn to the Middle East to meet their demand for oil… Therefore, market participants expect the embargo and in turn support Saudi Arabia Amy.

The price of Brent crude is expected to average $100 a barrel this year, the highest level since 2013, after rising more than 40 percent annually, according to the World Bank. Other Wall Street investment banks estimate that oil prices will average between $120 and $135 a barrel this year.

Shares in Saudi Aramco are becoming a sweet spot in the market as the outlook for oil prices remains well-supported for years to come. Since the beginning of the year, Saudi Aramco’s market value has recovered from $1.9 trillion to $2.45 trillion, and Aramco’s full-year 2021 net profit has more than doubled to $110 billion, thanks to high oil prices in 2021. up 67%. In contrast, Apple’s market value has fallen from $2.85 trillion to $2.5 trillion.

Saudi Aramco is the only non-U.S. company in the top 10 by market capitalization. It was followed by Microsoft, Alphabet, Amazon, Tesla, Berkshire Hathaway, Mida, Johnson & Johnson and UnitedHealth.

In March, Saudi Aramco said that as global oil demand surged and the impact of the pandemic receded, the company’s capital expenditures were expected to increase to $40 billion to $50 billion in 2022 (from $31.9 billion in 2021), and that by 2027 it planned to increase The company’s maximum oil capacity cap has been raised from 12 million barrels per day to 13 million barrels per day.

Apple’s “Road to Three Trillions”

Apple’s “Road to Three Trillion Trillion” is also ups and downs. Wall Street’s information has been sorted out earlier in the chart. In August 2018, Apple’s market value exceeded the $1 trillion mark for the first time, and then Apple’s stock price ushered in an adjustment. In September 2019 In January, Apple’s market value regained the trillion-dollar mark, and then began to accelerate.

The epidemic in March 2020 wiped out $500 billion in Apple’s market value, returning it to a level of $1 trillion. Then, under the flood of the Federal Reserve, in August 2020, Apple’s market value doubled to $2 trillion.

Microsoft briefly became the world’s most valuable company last year when Apple missed expectations. But Apple quickly regained its top spot, tripling its market value in less than four years since it first crossed the trillion-dollar mark.

An earlier article in Wall Street News mentioned that in the first quarter of this year, Apple created the best quarterly performance in a non-holiday period in more than 40 years since its establishment. Apple’s total revenue, iPhone and Mac revenue all hit new highs in the same period, and service revenue was five consecutive years. The quarter hit a record high, maintained a double-digit surge, and maintained a gross profit margin of more than 40%.

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