Apple (AAPL) – Get the Apple Inc. just lost a coveted title.
The iPhone maker snagged that crown in 2020 on a financial performance that made investors giddy with strong sales of its hardware – iPhone, Mac, Apple Watch – and a surge in services.
These revenues have steadily increased thanks to the Covid-19 pandemic which has seen the world stay connected through technological tools. The Cupertino, Calif.-based company had also managed to reassure investors worried about disruptions to supply chains caused by lockdown measures and chip shortages.
It’s no surprise, then, that Apple overtook Saudi oil giant Saudi Aramco to become the world’s most valuable company. Apple has become the first company in the world to cross the $3 trillion mark.
Two years later, the world has changed. Economies have reopened. Inflation was galloping. Supply chain issues have worsened with further lockdowns in China and soaring commodity prices following the Russian invasion of Ukraine. Recession fears have never been so strong among investors. And unsurprisingly, it is the technology sector that pays the highest price.
Apple is no longer the most valuable company in the world
From upstart companies to tech giants, almost no one has been spared. Apple shares are down 17% to $177.08 since January. Billions of dollars in market capitalization have evaporated.
At the same time, the energy sector is booming. Crude oil prices have soared due to supply problems after the Russian conflict in Ukraine. WTI crude oil is up 46.9% since January. As a result, shares of energy companies rose sharply. This is the case for shares of Saudi Aramco, which have gained just over 25% since January.
The Saudi giant announced on March 20 that its net profit had increased by 124% to $110 billion in 2021, compared to $49 billion in 2020. The company benefited from the surge in oil prices. Brent Crude, the global benchmark, rose nearly 80% over the period.
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Saudi Aramco took the opportunity to regain the crown of the most valuable company in the world. The company’s market capitalization was $2.382 billion as of May 13, compared to Apple’s $2.381 billion, according to FactSet data. Saudi Aramco has held the crown since May 11.
Given the current instability of the markets, it’s a safe bet that the two groups will exchange this crown throughout the year. Apple CEO Tim Cook warned in its latest quarterly results that the lockdown in China and the war in Russia will cost the company between $4 billion and $8 billion in the current quarter.
“Naturally, Cook wouldn’t predict when the supply issues would subside. That indicates how many moving parts are in play. I’m guessing Dec. 22,” said Loup Funds co-founder Gene Munster.
“AAPL essentially guided June revenue to $83 billion, versus $87 billion for the street, primarily due to supply chain headwinds and, to a lesser extent, currency and Russia.”
Munster added that: “The good news is the demand is there, they just can’t keep up with it.”
Apple could take advantage of the planned launch of the iPhone 14 in the second half of 2022 to outrun Saudi Aramco, but to do so the group would need to have control of the supply chain.
Microsoft (MSFT) – Get the Microsoft Corporation report with a market cap of $1.95 trillion is third. The software giant is followed by Alphabet (GOOGL) – Get the Class A report from Alphabet Inc. with a market value of $1.53 trillion and Amazon (AMZN) – Get the report from Amazon.com, Inc. with $1.15 trillion.
You’re here (TSLA) – Get the Tesla Inc reportthe electric vehicle maker, is sixth with a market capitalization of almost $800 billion, despite a rocky April due to the ongoing acquisition of Twitter (TWTR) – Get the report from Twitter, Inc. by its CEO Elon Musk.
Warren Buffett’s Berkshire Hathaway conglomerate (BRK.A) – Get the Berkshire Hathaway Inc. Class A report. is seventh with a market cap of $683.38 billion, followed by Mark Zuckerberg’s Meta Platforms (Facebook) – Get the Class A report from Meta Platforms Inc. with $567.85 billion.
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