As Software Sinks, US Oil Majors Shine Again

While software stocks crater, there's one corner of the market quietly staging a comeback: America's oil majors.

The Numbers Tell a Different Story

As the Nasdaq has shed over 15% in recent months, traditional energy companies are charting a different course. ExxonMobil is up 12% this year, while Chevron has gained 8%. The contrast couldn't be starker with tech darlings that once seemed unstoppable.

Several factors are driving this reversal. Oil prices have stabilized around $80 per barrel, providing predictable revenue streams. More importantly, years of painful restructuring are finally paying dividends—literally and figuratively.

These companies emerged from the 2020 oil crash leaner and more disciplined. ExxonMobil cut its workforce by 15% and slashed capital spending. Chevron divested non-core assets worth $25 billion. The result? Higher margins and stronger cash generation even at moderate oil prices.

The Dividend Renaissance

What's drawing investors back isn't just operational efficiency—it's cold, hard cash. ExxonMobil now offers a 5.8% dividend yield, significantly higher than the 10-year Treasury's 4.2%. In an era of elevated interest rates, that's compelling.

Chevron's story is even more impressive. The company has increased its dividend for 37 consecutive years, earning it "Dividend Aristocrat" status. Beyond the current 3.2% yield, Chevron is returning cash through aggressive share buybacks—$15 billion planned for this year alone.

Compare this to tech companies that burned through billions chasing growth with little to show shareholders. When Meta spent $13.7 billion on metaverse research last year while laying off thousands, the contrast with oil majors' shareholder-friendly approach became stark.

Energy Transition: Threat or Opportunity?

Here's where the narrative gets interesting. Rather than viewing the energy transition as an existential threat, these companies are positioning themselves as essential players. ExxonMobil has committed $17 billion to carbon capture technology. Chevron is investing heavily in hydrogen production and renewable fuels.

"We're an energy company, not just an oil company," Chevron CEO Mike Wirth emphasized at a recent investor meeting. This reframing reflects a strategic shift from defense to offense in the climate conversation.

Yet skeptics abound. Environmental analysts argue these investments remain token gestures—clean energy spending represents less than 10% of these companies' total capital expenditure. Critics question whether oil majors can truly reinvent themselves or are simply buying time.

The Geopolitical Wild Card

Global tensions add another dimension to oil majors' appeal. Russia's war in Ukraine highlighted energy security concerns, while tensions with China complicate renewable supply chains. Suddenly, domestic energy production looks strategically valuable again.

This geopolitical backdrop benefits American oil companies in ways that seemed impossible just five years ago. Energy independence isn't just an economic argument—it's a national security imperative.

The answer may determine which companies define the next investment cycle.