So what have the companies done about this beating on Wall Street? Microsoft has doubled its employee bonus pool, Google has committed to hiring more engineers, and Apple has showered its top hardware talent with a $ 200,000 bonus.
The relative panic in the stock market and the inconsistency between business-normal calm among tech giants foretell a time when analysts, investors and economists predict that the world’s largest companies will expand their leadership in their respective markets.
Tej reflects an understanding of their potential that companies have tight control over the world’s most lucrative businesses: social media, premium smartphones, e-commerce, cloud computing and search. Their dominance in those areas and other business commitments should dampen the pain of inflation, even as those challenges hammer large companies like Walmart and Target and move closer to the stock market market area.
The S&P 500 spent most of Friday below the threshold which is considered a bear market – usually defined as 20% below its last peak – before assembling late in the afternoon. The index ended the week with a 3% decline, its seventh consecutive weekly fall. This is its longest-running loss since 2001.
In the coming months, Microsoft, Google, Apple and Amazon are expected to increase recruitment, buy more businesses and become stronger and stronger on the other side of a bearish economy – even if they lower some of their overall valuations and their relentless growth over the past few years.
“Big Tech can say, ‘Forget the economy,'” said Richard Kramer, founder of Areti Research, a London-based think tank. Flush with cash, he said, “they can invest through the cycle.”
The plans of large companies are sharply contrasted with the wave of cost reduction through the rest of the technical sector. The sharp fall in share prices at nonprofit companies like Uber, 45% and Peloton, 58% lower, has led them to consider cutting or cutting the jobs of their CEOs. Startups are cutting back on their workforce as entrepreneurial capital funding slows.
Tony Sacconaghi, a technology analyst at Bernstein Research Institute, said the delays would create opportunities for companies to buy. Big deals can be difficult because the Federal Trade Commission is reviewing the takeover measures of Facebook, Apple, Amazon, Microsoft and Google, he said, but smaller deals for emerging technologists or engineers can be widespread.
During the Great Depression, Facebook, Amazon, Google, Apple and Microsoft acquired more than 100 companies from 2008-10, according to Refinitiv, a financial information firm. Some of those deals are fundamental to their business today, including the acquisition of Apple’s chip company PA Semi, which contributed to the company’s development of new laptop processors, and the acquisition of Google’s AdMob, which helped build a mobile advertising business.
“The adults will get bigger and the poor will get poorer,” said Michael Kusumano, deputy dean of the Sloan School of Management at the Massachusetts Institute of Technology. “This is how network effects work.”
There are warnings for this impenetrable feeling. The plans of big companies can always change if the economy continues to deteriorate and consumers fall further behind on their spending. And some big companies are more risky than others.
Meta CEO Mark Zuckerberg has responded by setting up a temporary recruitment fridge for some roles. During a recent all-hands meeting with employees, employees asked if there would be layoffs. According to a spokesman, Zuckerberg said the layoffs were not part of the company’s current plans and that the future was unlikely. Instead, he said the company focused on reducing costs and limiting its growth.
Amazon sent a similar signal to its employees last month after posting disappointing results. In a call with analysts, the company’s finance chief, Brian Olsawski, said Amazon would focus on spending spending after doubling warehouse and staff costs to keep pace with the epidemic. As people return to work and travel they are making fewer Amazon purchases, leaving more space and staff than the company needs.
But Amazon’s for-profit cloud business, Amazon Web Services, or AWS, continues to increase profits. The company plans to increase its spending on data centers and lean towards its success in the coming months. It has promised to raise the base compensation for its corporate employees from $ 160,000 to $ 350,000. And it is investing in plans to build a network of satellites to provide high-speed Internet through the launch of 38 rockets into space.
Among them, Facebook, Microsoft, Google, Apple and Amazon had about $ 300 billion in cash excluding loans at the end of March, according to Loop Ventures, an investment firm specialized in technology research.
Analysts say cash stocks could quickly fund a stock buyback as share prices fall. Doing so will increase the company’s earnings per share, provide more value to investors, and signal to the market that their companies are worth more than they are willing to accept on Wall Street.
Companies roared ahead during the epidemic as people sitting at home immersed themselves in a digital world. Customer orders have increased on Amazon for everything from hand sanitizers to instant pots. Closed stores have shifted online sales and increased advertising on Google and Facebook. Distant students and staff splurge on new iPhones, iPads and Macs.
Microsoft, the latest technology giant that lowered its rankings during a major recession, is doing the opposite in this turbulent time. Encouraged by a business that has proven to be more sustainable than its peers, Microsoft is slashing salaries, increasing its investment in cloud computing and standing with the $ 70 billion acquisition of Activision Blizzard, which it hopes will unlock more sales for its gaming empire.
Similar resilience has been demonstrated in Google and Apple. Google, a subsidiary of Alphabet, recently revised its performance review process and told employees they would likely receive a pay rise, according to CNBC. It plans to increase its spending on data centers to support its growing cloud business.
Apple CEO Tim Cook has a long-held view that Apple should continue to invest in the future, even in a recession. During the Great Depression, it doubled its staff and nearly tripled its sales. Recently, it increased the bonus for some hardware engineers to $ 200,000, according to Bloomberg.
John Chambers, who ran Cisco Systems through multiple recessions as its then-CEO, said companies’ strong business and deep pockets could allow them to take risks that would be unrealistic for smaller competitors. During the 2008 recession, he said Cisco allowed distressed automakers to pay for technology services, including credit, at a time when competitors were demanding cash. The company risked writing off 1 billion in inventory but emerged from the recession as an influential provider of a healthy auto industry, he said.
“Companies collapse during a recession,” Chambers said.
David Yoffey, a professor at Harvard Business School, says the darkness of the larger market has to be ignored for excelling. He said the previous recession showed that even strong businesses were sensitive to profit pressures and tended to retreat. “Institutions are as pessimistic as everyone else,” he said.
The first test for the largest technology companies will be contagious from their peers. Amazon’s share in electric vehicle maker Revian Automotive fell more than 65% to ক্ষতি 7.6 billion in paper losses. Analysts say the slowdown in advertising by app developers is likely to reduce Apple’s service sales, which rely on venture capital funds to finance their marketing. And startups are investigating their spending on cloud services, which will likely slow the growth of Microsoft Azure and Google Cloud, analysts and cloud executives say.
“People are trying to figure out how to spend smartly,” said Sam Ramzi, chief strategy officer at data-management company Datastax.
Regulatory challenges on the horizon can also darken the prospects for big tech companies. Europe’s Digital Markets Act, which is expected to become law soon, is designed to increase the openness of technology platforms. Among other things, it could reduce the estimated $ 19 billion it collects from Alphabet to make Google the iPhone’s default search engine, a change that could wipe out Bernstein’s estimate of up to 3% of Apple’s pretax profits.
But companies are expected to challenge the law in court, potentially binding the law year after year. Analysts are adamant about their consensus on the possibility of disruption: “Big tech is going to get stronger. And what is being done about it? Nothing,” said Kramer of Areti Research.
This article was originally published in the New York Times.