Due to the current scenario, tech giant Apple has lost its position as the most valuable company globally. Aramco, a Saudi Arabian oil company, has taken over that title. According to the media, this reversal is due to increased oil prices due to current inflation increases.
Aramco reached a market capitalization of $2.43 trillion and overtook Apple for the first time since 2020. Earlier in the year, Apple announced its market value of $3 trillion, roughly $1 trillion more than Aramco’s. Since then, the company has been down 16%, while Aramco is up 27%.
While a rise in oil prices is good for Aramco’s profits, rising inflation is causing the Federal Reserve to raise interest rates rapidly. Because of this, investors are overlooking tech companies and causing share prices to drop.
To Recovery It Will Take Time
Ingalls & Snyder Senior Portfolio Strategist Tim Ghriskey believes that recovery for tech companies will take some time. With the Fed planning to continue raising interest rates and no sign of a resolution in Ukraine, the tech giants cannot maintain their dominance.
He said that there is panic-selling in a host of tech and other high-multiple names. The money pouring out of there seems to be going into energy in particular, which is looking good for now, given commodity prices. Companies like Aramco are profiting enormously from this environment.
Supply chain constraints due to global conflict will continue to plague the iPhone maker. Recently Apple shared its earnings results for the second quarter of 2022, mentioning that it expects supply chain issues to affect its third-quarter results. However, the media mentions that Apple shares are still relatively safe to buy within the sector as the company has maintained steady growth this year.
Even though Apple lost its position as the most valuable company because of Aramco, the tech giant company is still the most profitable in the US.