The end of 2022 was overshadowed by fears of a possible economic crisis, with sales of tech giants Alphabet and Microsoft slowing sharply. Microsoft and other companies also saw job cuts. The second half of 2023 brought a better outlook, with Meta seeing an increase in revenue from advertising and Apple becoming the first company with a market value of $3 trillion.
Towards the end of 2022, there were fears of a market downturn. Sales of tech giants Alphabet and Microsoft had slowed sharply.
Alphabet, which owns Google and YouTube, said revenues in the third quarter rose just 6% to $69 billion as the company slashed its advertising budget. It was the weakest quarter for the company in nearly a decade, if you don't count the coronavirus pandemic. In fact, during the pandemic, technology companies saw their revenues skyrocket.
This was no different for Apple. Apple's October-December revenue was down 5% compared to the same period lastyear. Meanwhile, another tech giant, Microsoft, also saw a drop in demand for its technology. As a result, Microsoft boss Satya Nadella decided to cut jobs. Many other companies such as Meta, Netflix and Twitter (currently social network X) have made the same decision.
The beginning of the year still mimicked the end of the previous one. Microsoft announced in January that it plans to cut 10,000 jobs in the coming months, representing 5% of its workforce. This added to the mass layoffs that Amazon has begun in early 2023.
The layoffs were not a big surprise to anyone. Companies like Microsoft, Salesforce, Amazon and others have seen tremendous growth over the past three years, hiring tens of thousands of new employees. But analysts say they have hit a wall - their customers have stopped buying IT technology, and so there has been a drop in revenue and more layoffs.
The only tech giants that have avoided significant layoffs are Google and Apple. In Apple's case, it has stopped hiring. Google's parent company Alphabet has made layoffs in one of its divisions, but Google itself has not seen any major cuts.
Meta, on the other hand, posted higher profits in the first quarter of 2023, although it was partly hurt by its competitor, social network TikTok. In March, the company also announced three rounds of planned layoffs to further reduce the size of the company by about 10,000 employees.
Competition in artificial intelligence has also begun to take shape. Google's competitor is Microsoft, which announced earlier this year that it would invest billions of dollars in OpenAI, the creator of ChatGPT.
→ Tip: You might be interested in how artificial intelligence can be used in programming.
By mid-year, things started to improve. Revenues at Meta, which owns Facebook, jumped more than 10% in July on strong ad revenue growth, and Apple became the first company in the world to reach a market value of $3 trillion in 2023.
Microsoft beat estimates on its revenue thanks to growth in cloud computing and its office software. Still, Microsoft's share price fell 1.4% in July after the company unveiled how much of its budget it plans to put toward developing artificial intelligence.
Amazon's bet on profitability has paid off. The company's new chief, Andy Jassy, reported earnings of 65 cents per share, beating estimates that were hovering around 35 cents per share. As a result, the company's stock rose nearly 9%. The last time Amazon made a profit like that was in February 2021.
Social Network X (Twitter) has seen ad revenue fall by roughly 50% since last October 2022. The company also had about 8,000 employees a year ago, but only 1,500 in August.
Although the start of 2023 did not bode well, the end of the year turned out better than expected for the tech giants. At least as far as Microsoft, Apple or Google are concerned, for example.
Software company Microsoft's third-quarter revenue rose 13% to $56.5 billion. What led to the increase? Mainly strong demand for cloud services.
As of September 30, 2023, Meta had completed its planned layoffs and its revenue was $34.15 billion, up 23% year-over-year.
On the other hand, Musk's social network X is not in the best shape. Elon Musk has failed to make a single meaningful improvement to the platform, instead discouraging users and advertisers alike. In May, he tried to remedy the situation - he hired Linda Yaccarino, a former NBC executive with ties to the advertising industry, to lure advertisers back. While some have returned, they aren't spending as much as they have in the past. Insider Intelligence estimates that ad revenue will be around $1.89 billion, down 54% from 2022. Even traffic to the platform is down. Research firm Similarweb reports that global web traffic is down 14% year-over-year and traffic to the ads.twitter.com portal for advertisers is down 16.5%.
How will technology companies fare in the coming year? None of us know yet. Technology evolves from day to day - so we'll leave the predictions to others. You can shorten your wait for news by reading our blog articles, which are published regularly every week.
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