Apple Knocked Off Top Spot as World’s Most Valuable Company Amid Surge in Energy Prices

Customers shop at apple's flagship store for smart products on Nanjing Road pedestrian street in Shanghai, China, Feb. 23, 2022. Costfoto/file/Future Publishing via Getty Images

Apple has lost its position as the world’s most valuable company to Saudi Arabian oil and gas producer Aramco amid a broad investor sell-off of tech stocks and a surge in energy prices.

Shares in Apple fell by more than 5 percent in New York on Wednesday to end the trading day with a stock market valuation of $2.37 trillion, slightly below that of Aramco, which was valued at $2.42 trillion.

It marks the first time that Aramco has held the position of the world’s most valuable company since 2020.

The change in the leading position comes as investors look to less risky assets amid a shifting global economy that has been plagued with rising inflation and ongoing supply chain issues, promoted by the COVID-19 pandemic.

In January, Apple became the first company in the world to hit $3 trillion in market capitalization, driven in part by investor confidence that the iPhone maker would continue to launch best-selling products that are purchased by loyal customers while delving into new markets such as automated vehicles and the “metaverse.”

However, many investors now fear that sky-rocketing inflation will have an impact on consumers’ spending habits.

Apple’s global phone sales revenue was at $50.6 billion for the second quarter, a record for that period and a year-over-year growth of 5 percent. However, the company said last month that it expects supply constraints caused by COVID-related disruptions and lockdowns, the majority of which are in China, to impact sales by $4 billion to $8 billion. This is substantially more than it experienced during the March quarter.

“We believe our year-over-year revenue performance during the June quarter will be impacted by a number of factors. Supply constraints caused by COVID-related disruptions and industrywide silicon shortages are impacting our ability to meet customer demand for our products,” Luca Maestri, chief financial officer at Apple Inc., said during an April 28 earnings call detailing the company’s second-quarter results.

Meanwhile, oil prices have continued to surge this year, rising to a 14-year high of $139 a barrel in March and pushed further by the Ukraine-Russia conflict which has seen concerns regarding supply disruptions from the latter. Thus, shares in energy producers such as primarily state-owned Aramco have also risen along with the cost of crude oil and natural gas.

In March, President Joe Biden announced Washington would release millions of barrels of crude oil from U.S. strategic reserves in an effort to combat supply disruptions related to Russian President Vladimir Putin’s war on Ukraine.

This month, the U.S. Department of Energy announced a “long-term replenishment plan” for the nation’s strategic petroleum reserve which is also aimed at alleviating supply disruptions and replenishing domestic stocks.

Under that plan, the United States will take bids this fall to buy back 60 million barrels of crude oil for its reserve.

However, the price of fuel across the country is continuing to rise, with Americans now paying $4.418 per gallon of gasoline on average to fill up their tanks, according to data from the automotive group AAA.

Meanwhile, the European Commission has proposed a ban on Russian oil by the end of the year, although a number of nations have rejected that ban.