Home » Big Tech’s earnings malaise reflects wider economic challenges

Big Tech’s earnings malaise reflects wider economic challenges

The news: Big tech kept the economy afloat during the pandemic as the sector boosted earnings, but the latest earnings reports show tech giants are not immune to the flagging economy, per The New York Times.

Signs of an inevitable slowdown: Third-quarter earnings reports from the biggest tech companies point to a slowing economy on the back of inflation, rising interest rates and lower consumer spending.

“We have a dark winter ahead of us,” he said Brent Thill, a technology analyst at investment firm Jefferies. “From small … to large – no one is immune.”

alphabet‘s growth has slowed for five consecutive quarters, with revenue coming in at $57.5 billionjust before the expected $58.3 billion.

  • Alphabet executives said they’re seeing fewer ad spend on insurance, credit, mortgages and crypto.

Metawhich was rebranded a year ago to continue its Metaverse quest reported an operation Loss of $3.7 billion for his Reality Labs VR Division.

  • It looked Sales down 49% from the previous year to $285 million per year insider.
  • Meta shares are down more than 61% this year amid increased competition from TikTok and falling ad sales.

Amazonthe second largest employer in the US with 1.52 million employees in Q2 per CNBCrestricts expansion, mothballing buildings and withdrawing from leases in preparation for a slowdown.

Microsoft, which is normally rock solid, had its biggest drop since 2020 due to slowing cloud growth. Stocks slipped as much as 8.2% and the stock’s value is down about 30% so far this year, per Yahoo.

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The pandemic rush has stalled: Big tech companies thrived for three years during the pandemic, with remote work and education needs driving revenue from hardware, services and subscriptions. Strong ad sales similarly boosted social media and e-commerce titans.

Innovation in the industry has also declined in recent years.

  • Despite years of investment in Moonshot projects, companies like Google and Meta are primarily dependent on ad sales.
  • That iPhone remains Applethe most profitable product of , 15 years after it created the smartphone and mobile app market.

The social media landscape has also had to accept losses. tick tockThe surge in popularity and slowdown in engagement on platforms like Facebook, Youtube, Instagramand snap have led to restructuring and downsizing.

Google and Microsoft plan to slow the hiring and monitor rising energy and supply chain costs. Apple also noted that it will consider how to expand its workforce if the economy struggles. It has also increased the prices of various Subscription Services.

Key taking: The biggest players in the tech sector will continue to serve as harbingers of economic recovery. Expect companies to continue to rein in spending through 2023.

This means cutting headcount, phasing out underperforming products and services, and scaling back production to adjust to weaker demand.

This article originally appeared in Insider Intelligence’s Connectivity & Tech Briefing – a daily round-up of the top stories the technology Industry. Sign up to get more badass takeaways delivered to your inbox every day.

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