More than 1.5 lakh tech employees have been laid off already this year.?
Meta, Microsoft, Google, IBM, Dell, HP, Amazon, Accenture and Zoom are some of the many giant organizations that have announced mass layoffs this year.
When we look specifically at the tech giants, Apple is the only exception who hasn't yet announced mass layoffs, though it has joined others in the list of cost cutting measures through other ways like hiring freeze and bonus delays.
But amidst all these mass layoffs and the criticism many of such tech giants are receiving for overhiring specifically during the pandemic boom and now facing a different reality which is making them do mass layoffs, the stocks of these tech giants are telling a different story.
Stock prices of most of these tech and software giants, such as Microsoft, Meta, Alphabet and Salesforce have been soaring this year despite the mass layoff announcements. Google parent Alphabet¡¯s share price is up nearly 17% this year till date, Meta is up 66%, Salesforce is up more than 40%, Microsoft is up nearly 15%, Dell is marginally up 2%. Even e-commerce giant Amazon¡¯s stock is up nearly 20%.
So how is this happening? What¡¯s driving the shares of these companies upwards despite global recession fears, economic uncertainty and mass layoffs?
Well, the reasons are many. Firstly, employment data in the US, where most of the tech giants are based in, remains robust. The total (non-farm) payroll employment rose by 236,000 in March 2023, and the unemployment rate changed little at 3.5%, the U.S. Bureau of Labor Statistics reported this month.
Employment continued to trend up in leisure and hospitality, government, professional and business services, and health care.
Also, according to most tech CEOs, the ongoing layoffs are primarily a correction to over-hiring during the pandemic. The way some CEOs justified the mass layoffs confirms this.?
During mass layoff announcements, Alphabet CEO Sundar Pichai had said "We Hired For A Different Economic Reality". Microsoft CEO Satya Nadella had said - "Focusing On Our Short & Long-Term Opportunity".?
Twitter's Former CEO Jack Dorsey had said "Regret Growing The Company Too Quickly" and Meta CEO Mark Zuckerberg had said "Taking Steps To Become A Leaner & More Efficient Company". Last year, American automaker Ford¡¯s CEO Jim Farleyhad said "We Have Too Many People¡±.
Also Read:?How To Be Financially Prepared Amid Mass?Layoff?Wave
Another reason behind most tech stocks' rise this year is their strong financial results. The recent quarter (Jan-March 2023)¡¯s financial results of most tech giants have been robust.??
Satya Nadella led Microsoft recorded a 9% increase in profit to $18.3 billion for the January-March quarter, on the back of a rise in cloud computing sales, thus bolstering its plans to expand the use of artificial intelligence. It also posted $52.9 billion revenue in its third fiscal quarter, up 7% from $32 billion the same period a year ago.
Even Sundar Pichai led Alphabet too posted strong results, with $69.79 billion in revenue (a rise of 3% vs a year earlier). Google, as per CNBC report, is also finally generating a profit in its cloud-computing business, with an operating income of $191 million in the last quarter, following a $706 million loss a year ago. Meta's Q4 results for FY 2022-23 are expected to be announced soon.
Also Read:?How To Manage Loan EMIs After Losing Your Job
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