The S&P 500 is trading at a record and the Nasdaq is at its highest in two years, CNBC reported. Alphabet shares reached a new pinnacle on Thursday, as did Meta and Microsoft, which ran past $3 trillion in market cap.
While Wall Street cheers on Silicon Valley, tech companies are downsizing at an accelerating clip So far in January, some 23,670 workers have been laid off from 85 tech companies, according to the website Layoffs.fyi. That’s the most since March, when almost 38,000 people in the industry were shown the exits.
According to CNBC, activity picked up this week with SAP announcing job changes or layoffs for 8,000 employees and Microsoft cutting 1,900 positions in its gaming division. Additionally, high-valued fintech startup Bret laid off 20% of its staff and eBay slashed 1,000 jobs, or 9% of its full-time workforce.
Earlier in the month, Google confirmed that it cut several hundred jobs across the company, and Amazon has eliminated hundreds of positions spanning its Prime Video and MGM Studios, Twitch and Audible divisions. Unity, said it’s cutting about 25% of its staff, and Discord, which offers a popular messaging service used by gamers, is shedding 17% of its workforce.
CNBC also reported that the swarm of activity comes ahead of barrage of tech earnings next week, when Alphabet, Amazon, Apple, Meta and Microsoft are all scheduled to report quarterly results. Investors lauded the cost-cutting measures that companies put in place last year in response to rising inflation, interest rates hikes, recession concerns and a brutal market downturn in 2022. Even with an improving economic outlook, the thriftiness continues.
International Business Times reported that the industry’s pursuit for efficiency and cost-cutting measures is thoroughly connected to tech industry riding into artificial intelligence (AI) wave.
Meta’s CEO, Mark Zuckerberg, said 2023 was the “year of efficiency,” with a stock surge alongside 20,000 job cuts. The increasing demand for AI technologies has led some companies to strategically scale down headcount in non-profitable areas and relocate resources toward AI development.
According to International Business Times, tech execs are strategically crafting their downsizing messages emphasizing the need for focus and efficiency. Microsoft Gaming CEO Phil Spencer described the layoffs part of a larger “execution plan,” while Alphabet’s CEO Sundar Pichai focused on the importance of making tough decisions for meeting the ambitious goals. Amazon’s Audible CEO, Bob Carrigan, emphasized the necessity of becoming “leaner and more efficient”.
In my opinion, it is never a good idea to suddenly lay off employees with absolutely no warning. Choosing to do layoffs of real humans, in favor of adding more artificial intelligence to take over their jobs, is a terrible decision. The “robots” should not be allowed to replace the livelihood of humans.