After a period of exponential growth for tech players, the sector is now being hit by a multi-factor crisis. Even the most powerful companies are affected.
The fun is over
In 2020, the Covid-19 pandemic has greatly benefited many technology companies, and especially the big tech ones. For example, Amazon saw its revenue double during this period, and will experience similar growth in 2021.
Since the beginning of 2022, however, the quarterly results of tech players have been less colorful than in the previous two years. In particular, inflation, the significant rise of the dollar, a European economy shaken by high energy costs and the war in Ukraine, as well as supply disruptions in Asia. As a result, the company’s recent financial results, released last week, were in most cases particularly bad.
For example, Intel announced a sharp drop in quarterly sales, lowered its PC shipment forecast for this year, and said 2023 could be even worse… In fact, demand is also lower of hardware. than when the pandemic hit the world and people were stuck at home. Consumers should also moderate their spending due to price inflation, which also affects smartphone sales: Samsung recorded a 23.6% drop in net income.
Growing areas are also affected
For its part, Meta saw its revenue drop sharply for the second time in a row, a first for the social networking giant which has now announced a big brake on its recruitment. It’s the same story for Google, as for the first time, YouTube advertising sales are down year over year. Against this backdrop, Sundar Pichai, CEO of Google, told employees that the company is growing too fast and needs to be more responsible when it comes to spending.
In general, companies operating in the digital advertising sector have been greatly affected, especially due to the changes introduced by Apple last year in terms of advertising tracking, as well as the reductions in spending related to recession, the report of Wall Street Journal.
Another sector that is affected, as it develops and develops, is cloud computing. It fell faster than expected from the highs reached in the past two years. Amazon Web Services (AWS) reported a 27% year-over-year increase in net income, compared to 39% last year. Microsoft’s revenue in this area was 35% this quarter, compared to 50% last year.
Similarly, Microsoft saw Windows sales fall by 15%, and the trend is expected to worsen by the end of the year.
The situation does not seem to be improving for the technology sector
Like the leaders of Meta and Google, those at Amazon are making decisions to limit losses. The company began subletting millions of square meters of warehouses and stopped hiring some of its teams. ” We will be careful with our hires. We are definitely looking at our cost structure and looking for areas where we can save money “, explained Brian Olsavsky, the CFO of the e-commerce giant.
So far, Apple has fared better than the other GAFAMs and posted record sales despite slower growth. If the company did not meet analysts’ predictions in terms of iPhone sales, Tim Cook recalled that it was doing better than its competitors in an affected smartphone sector. In addition, the Apple brand broke its own MacBook sales record while the PC industry was experiencing severe difficulties. However, he did not want to make predictions for the next quarter because the climate is uncertain.
According to the statements of leaders and experts, the trend is not expected to improve in the near future. The technology giants are therefore tightening their belts to allay investors’ concerns about such a slowdown in their growth, which translates into lower investments but also a significant change of direction in the recruitment process, as well as through more frequent layoffs.