On Friday the 2nd of February, Big Tech experienced strong results, especially from the Big 7. Interestingly, Facebook reported that their social media page experienced the biggest ever one-day increase in a company's market value. Similarly, the world's leading e-commerce company, Amazon, experienced its shares closing 7.9% higher on Friday after a surge in consumer spending during the holiday season, resulting in a $135 billion rise in market value. The collection of exceeding forecasts by the menagerie of firms listed had led to the S&P 500 gaining 1.1% to a record closing high while its counterpart, the NASDAQ Composite Index, climbed to 1.5%.
As the likes of Nvidia, Meta, Microsoft, and Amazon had risen in share price since Friday, it is notable that some tech giants such as Tesla and Apple had fallen in share price, speculatively due to diminishing global sentiment and falling consumer and investor confidence. The investors in Apple feared that a slowdown in China, despite the promising optimism from Tim Cook regarding AI features, would waive an underwhelming feeling for the pool of investors, hence leading to its fall in shares by 0.5%. Clearly, the current market sentiment displays a sense of divergence and ambiguity regarding the Big 7 and suggests that one firm’s impressive earnings don’t cause a correlation between all its other counterparts.
Interestingly, Anthi Tsouvali, an analyst at State Street Global Markets, stated that “by the end of the year, maybe there could only be a magnificent three or magnificent four,” demonstrating the conflict of sentiment towards the global tech giants.
Nevertheless, despite the record soaring of share prices and earnings from Friday's wave of success for most tech giants, it has not offset the concerning level of layoffs within the firms. In a current economic climate where the US economy added 353,000 jobs in January, Google, Amazon, Microsoft, and eBay made significant cuts to their workforce. PayPal reportedly stated that they would cut 2,500 employees, which equates to around 9% of its total workforce, whereas Citi Group, a multinational investment bank, signalled that they would slim down their operations by reducing 40,000 employees from their payroll. Such stage-setting figures beg the question: why are these momentous changes occurring at the beginning of a recovering and optimistic year?
The main driving force behind the mass, collective redundancy is a shift in targets that aims to tackle high costs and more efficient investment strategies. Amazon’s CFO, Brian Olsavsky, stated that they would “do more with less to find efficiencies,” demonstrating the reduction in demand for labour and employees by adopting a radical approach to focus on effectively optimising internal functions instead. Furthermore, the lacklustre factor regarding tech prospects and valuations for the future, as analysts fear that the highs of COVID and post-COVID earnings and share prices may not be achieved again, has disheartened tech firms, and led them to adopt a pessimistic approach towards the future landscape regarding the industry.
The question of how this impacts the perspectives of current and future tech employees is now in jeopardy. Some analysts, such as the ex-Bay Area Software Company product designer Julia Grummel, state that the “interest of joining an organisation that doesn’t value the people who are keeping the business running is diminishing," which highlights the frustration and cynicism expressed by many in the industry, therefore alluding to the idea that, in the future, jobs within the big tech sector may not be at large or sought-after like in the post-pandemic era.
The extent of the discontentment and bitterness experienced by many aspiring Big Tech prospects is immeasurable and ambiguous; however, the notion that this may negatively impact future recruitment at the Magnificent 7 is not far-fetched. For now, tech giants may enjoy the triumph experienced through a resounding earnings period, but the threat of long-term issues with job retention and employee satisfaction lingers.
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