Job Cuts At Big Tech Firms Surpass 7,500 Since Beginning of 2024; Analysts Still See Potential Of Bull Market In Upcoming Earnings

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Google, Amazon, and Meta
Job cuts at Google, Amazon, and Meta have surpassed 7,500 since the beginning of 2024. Nevertheless, amid this upheaval, financial analysts are identifying the potential emergence of a bull market in the upcoming earnings reports season. File photo: Gguy, ShutterStock.com, licensed.

NEW YORK, NY – Since the onset of the pandemic, restructuring efforts across tech giants including Google, Amazon, and Meta, have resulted in over 7,500 layoffs since the start of 2024 alone. However, amidst this turmoil, financial analysts spot the dawn of a potential bull market in the forthcoming earnings reports season.

Is big tech headed for a boom or set for a bust? This is the question on everyone’s mind as big tech earnings season kicks off this week. Despite the wave of layoffs, analysts expect strong numbers, pointing towards a leaner, more efficient industry refocused around cloud computing and AI, following a phase of pandemic-era over hiring. The shift indicates that we could be at the brink of a tech bull market.

Since the beginning of the year, Google has laid off a thousand employees across various departments; lean in comparison to the 12,000 layoffs announced by the CEO, Sundar Pichai, last January. These job cuts are part of a bigger plan to “remove layers to simplify execution and drive velocity in some areas,” as per Pichai’s recent internal memo. The Alphabet Workers Union, however, considers these layoffs ‘needless’.

Similarly, Amazon has let go of several employees from its Prime Video and Amazon MGM divisions as part of a strategic pivot towards its core priorities such as online shopping logistics and new ones such as AI. There has also been a thinning in the ranks at Meta with Instagram eliminating a layer of management, continuing with the theme of job cuts from last year.

According to the industry analyst, Dan Ives, from Wedbush, we are at “the start of a tech bull market”. The focus, it seems, is on reallocating resources, reducing costs in areas that do not generate revenue, and doubling down on AI. The stressed point lies in viewing this period as a phase of ‘reallocation’ rather than shocking job cuts.

Among those who stand to gain big from this refocus are Apple and Microsoft. Apple’s Vision Pro headset, launching this month, and the new iPhone models equipped with generative AI features aim to bolster faltering sales due to weak Chinese economy. In a recent report, Wamsi Mohan, a securities analyst from Bank of America, spoke of the potential for a “stronger multi-year iPhone upgrade cycle”. This would be driven by the anticipation of these new AI features.

Microsoft, the new global leader in terms of market capitalization, is also expected to benefit from this shift. Ives suggests that Microsoft’s forerunning position in AI could yield as much as $25bn in the company’s revenues by 2025.

Increased demand for enterprise software and cybersecurity, coupled with notable advancements in AI, ties together the narrative for the forthcoming earnings season. “The shift to cloud and AI is having a massive effect on tech, including the reallocation of jobs and a lot of changes to Apple and Google,” Ives further elaborates.

The current scenario, marked by sweeping layoffs and a shift in focus towards AI and cloud computing, heralds the initiation of a new tech bull market since the summer of 2023, in Ives’ perspective. The sweeping transformations could be regarded as re-sculpting of the big tech landscape, preparing it for the next significant leap into an AI-driven future.

While job cuts spell doom and gloom in the short term, if these predictions hold true, the sector could soon be on the upswing. As always, it is a case of wait and watch in the evolving world of big technology.

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