Aramco bites Apple

Oil is up and tech is down; the re-alignment of market risk is taking its toll. 

Times are changing  

Once upon a time, tech stocks were the kings of the ring. Oil and gold might be some of the safest investments around, but a good tech stock was a close-running third. Now, it’s all change. In a sign of market sentiment, Saudi Aramco – not Apple – is the highest-valued company in the world.  

In a market cap pincer movement, the war in Ukraine and subsequent sanctions on Russia have been something of a boon for Aramco, while at the same time, Apple has been pummeled in its Q1 figures. 

Short-term blip or long-term play? 

Market capitalizations change all the time, so it’s unlikely the crown will remain atop one head for any length of time – for now at least. What will eventually prove to be more telling though is how long Aramco stays top dog. With inflation and geopolitical tensions being what they are and interest hikes pushing investors away from certain products, oil really is more attractive at the moment. 

The oil-producing OPEC+ has already pledged to increase production to offset the loss of cheap fuel from Russia, meaning that Aramco is in a win-win market. Apple, on the other hand, is under fire from the markets and is also facing some massive production slowdowns with its Chinese production plants operating at minimal, Covid-enforced capacity. 

So is oil king once again? Are there several long years ahead for tech firms? Investors are starting to think so.