Saudi Aramco replaces Apple as the world’s most valuable company

Saudi oil giant Aramco has overtaken Apple as the world’s most valuable company. The news comes as Aramco boasted an 82% rise in quarterly profits to a new record of $39.5 billion (€37.97 billion).

The current 14-year high prices of crude oil mean that the Saudi Arabian oil company’s valuation stood at $2.426 trillion (€2.33 trillion) this week, next to Apple’s $2.415 trillion (€2.32 trillion). 

The change of top-dog has largely been the result of two parallel realities: the Ukrainian-Russian war has created a scarcity of oil, boosting Aramco’s profits. At the same time, post-covid consumer habits, supply constraints and lockdowns in China have meant that Apple has not been able to enjoy the same gains.

This isn’t Aramco’s first time at the top spot. The Saudi company became the world’s most valuable listed company in December 2019. But in August 2020, due to global lockdowns, the Saudi oil giant then declared that its quarterly earnings had dropped a giant 73%.

Read more: bp announces £18bn in new UK projects as windfall tax threats loom

Russia’s war in Ukraine has caused oil prices to skyrocket. But lack of oil is not the issue: global supplies are in fact increasing. Instead, since late February, buyers are shunning Russian crude, even when it’s being sold at a discount.

Russia makes up 11% of the world’s share of oil and is the world’s third-largest oil supplier after the US (20%) and Saudi Arabia (12%). But according to the BBC, nearly as much as 70% of Russian oil currently does not have a buyer and the situation is then made worse by shipping and payment difficulties.

On top of this, Aramco has relatively low production costs, as much of its oil is in easy-to-tap areas, or in shallow waters. According to Al Jazeera, in March 2020 Aramco had the lowest production cost in the world at the time, with US oil companies needing to sell at a price 14 times higher than Aramco’s to cover their own costs.

In January, Apple became the first company to reach a $3 trillion (€2.88 trillion) market value – meaning that since the first iPhone was presented in 2007, Apple’s share price had risen by 5,800%. At the time, this valuation was about $1 trillion more than Aramco’s.

Since then, however, Apple’s value has dropped by 20%, while Aramco is up by 28%. Currently, Apple’s valuation is approximately $2.415 trillion (€2.32 trillion), having dropped by 8% last week. But, its approximate 13% total valuation loss is still less than the Nasdaq 100’s 18% drop – meaning that despite alarming figures, Apple remains an outperformer. 

Ongoing global inflation means that people are having to adjust their standard of living and expensive technology and gadgets are often the first things to go – another issue that Apple is contending with. In the US, according to the Bureau of Labor Statistics, the consumer price index had risen by 7.5% since the previous year, while in the UK this was 5.4%. High interests are also more likely to affect the value of “growth stocks” – companies that promise future, rather than more immediate, returns. 

Despite being knocked off first place, Apple nevertheless remains the most valuable US company, with Microsoft Corp coming in second place at $1.95 trillion (€1.87 trillion). Apple made history in August 2018 becoming the first company to be valued at $1 trillion.

Apple's post-covid profit changes are part of a larger pattern: streaming giants like Netflix, home fitness equipment like Peloton and gadgets were big winners during the pandemic but since then have not been able to sustain their edge as the end of lockdowns has drastically changed consumer habits. Netflix, for example, saw its valuation drop by $52 billion over the past year.

Read more: EU and India join forces to make Trade Technology Council

Lockdowns in China have also caused further issues for Apple, which has its biggest factories in the country. An Apple supplier, for example, had to suspend production at two factories in late April due to reported Covid-19 cases on-site.

China has been continuing its hardline ‘Zero Covid’ approach, which is affecting businesses, including Tesla and Taco Bell. Tim Cook said that the supply constraints and continuous lockdowns could cost Apple as much as $8 billion this quarter alone.

Some analysts question whether comparing the two companies is helpful. After all, Apple is a public company, while state-backed Saudi Aramco only has a few freely floated shares. The Kingdom owns 94% of Aramco.

Back to Homepage

Back to Politics & Economics