Apple Loses Its Position as the Most Valuable Firm Amid Tech Sell-Off

The recent tech sell-off has hit Apple hard. The California-based company has lost its position as the world's most valuable company. Aramco, a Saudi Arabian oil and gas producer, has reclaimed the spot for the first time in about two years.

The Fall

Investors have been selling tech firms' shares to move into less risky assets. Even cryptocurrencies have seen a sharp decline. The price of Bitcoin has been pushed below $27,000, and it has now lost about 60% of its value since hitting a record high in November 2021.

Apple's shares have fallen by about 20% since the start of 2022.

The Numbers

The shares of Apple fell by over 5% in New York last Wednesday. The day ended with a stock market valuation of US$ 2.37 trillion (£1.94tn). As a result, Apple lost its position as the most valuable company globally to Aramco, valued at $2.42tn.

This marks the first time Aramco has held the top spot since 2020. Aramco's rise is not a surprise as shares of energy producers have risen considerably this year as the cost of crude oil and natural gas have increased.

Last Wednesday, the technology-heavy Nasdaq closed 3.2% lower in New York after official data showed that US inflation was still near a more than 40-year high.

The rising prices have become the biggest threat to the recovery of the global economy as it emerges from the long-lasting Covid-19 pandemic.

Central banks worldwide have responded to the current problem by raising interest rates. It has led to a move out from riskier investments. There are concerns that the higher cost of borrowing will slow down economic growth.

Impact of the Pandemic

Pandemic has helped Apple to grow in the past. In January, it hit a stock market valuation of US$ 3tn (£2.2tn). The main reason for this increase was the fact that coronavirus lockdowns led to more spending on gadgets. During lockdowns, in just over 16 months, the stock valuation of Apple increased from US$ 2tn to US$ 3tn.

The Rise of the Oil Giant

State-owned oil giant Saudi Aramco has considerably benefitted from the rising energy prices. Saudi Arabia is the largest producer in the Opec oil cartel. So, no one was surprised to know that Saudi Aramco more than doubled its net profit. It was US$ 49bn in 2020 and rose to US$ 110bn in 2021.

There are many reasons for the oil giant's rise. The reopening of economies has led to a considerable increase in energy prices in 2021. Also, the ongoing Russia-Ukraine war has pushed the prices higher as countries look for alternatives to Russia for supplies.

The Growth

The news of Apple losing its position as the most valuable company came two weeks after it reported second-quarter revenue of US$ 97.3 billion. It was a new all-time record for March. The company saw growth across its ‌iPhone‌, Mac, Wearables, and Services product categories. However, iPad revenue experienced around a decline of 2% compared to the same quarter a year before.



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