11 months ago • 2 mins
Microsoft’s the latest tech giant to announce layoffs, shedding 10,000 employees according to news out on Wednesday.
What does this mean?
First things first, let’s get the numbers straight: it might sound like there are going to be tumbleweeds blowing around Microsoft HQ, but with a whopping 220,000 folk on the books, the company’s only saying goodbye to around 5% of its workforce. Of course, that’s not nothing – and it’s probably a sign that the world’s biggest software company’s growth is slowing. In fact, the firm’s chief Satya Nadella said as much recently, confessing that the next couple of years are going to be rough for Microsoft. The emerging playbook: trim the fat for today’s leaner times, while making multi-billion-dollar deals with ChatGPT-owner OpenAI.
Why should I care?
Zooming in: Gimme growth.
The revenue that Microsoft brings in from cloud-based services started taking off around 2016, and – surprise, surprise – the firm’s stock price followed suit. But now that particular golden era might be fading, so investors will be getting restless, worrying where on earth tomorrow’s momentum is going to come from. The answer could well be artificial intelligence, but investors will be hoping it makes strides soon, before Microsoft has to downsize even further.
The bigger picture: Not a needle mover.
Job losses are the last green light that the Federal Reserve (Fed) is looking for before it takes its foot off the rate-hiking pedal – but it won’t be getting too psyched about these headline-grabbing tech layoffs. After all, the entire US tech industry employs between 8 and 10% of the total workforce, so even if Big Tech cuts a fraction of that fraction – well, the effect’s not going to be earth-shattering. That’s why the Fed’s watching the real big dogs instead: sectors like hospitality, healthcare, and retail, which employ Americans in droves.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.
/3 • Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.