Big U.S. technology firms are anticipated to reduce their bloated workforce and costs over the coming months, undoing excesses from the pandemic era in an effort to support margins and allay investor concerns during a period of slowing sales growth.
However, as they attempt to readjust in a high-interest environment, each of the top five tech companies in the United States is anticipated to report a decline in profits for the three months ending in December. The largest declines are anticipated from Meta Platforms Inc (META.O), a company that owns Facebook, and Amazon.com Inc (AMZN.O).
Analysts have decreased their total revenue forecast for the five companies by 5%, to $561.4 billion as of January from October, for Meta, Amazon, Apple Inc (AAPL.O), Alphabet Inc (GOOGL.O), and Microsoft Corp (MSFT.O).
According to FactSet data, the eleven sectors of the S&P 500 are expected to be most negatively impacted by large technology companies, with the information technology sector expected to experience an earnings decline of 9.5%.
Amazon began informing employees on Wednesday whether they were laid off as part of its decision to cut 18,000 jobs, which is expected to result in earnings falling 38% and revenue growing at the slowest rate in more than 22 years.
For the first time in 15 quarters, Apple’s revenue is predicted to decline as its top supplier Foxconn (2317.TW) experienced significant disruption at the largest iPhone factory in China as a result of employee unrest related to COVID curbs.
The slowest revenue growth in ten quarters is anticipated at Alphabet, which is slowing hiring and making “course corrections” to reduce costs.
Analysts predicted that these companies would spend heavily on buybacks this year to support stock prices. In contrast to the nearly 20% decline in the overall market, their shares fell between 26% and over 60% last year.
At the end of the September quarter, they had combined cash and cash equivalents worth over $110 billion, with Amazon having the most and Meta having the least.
