Whatās Going On Here?Microsoftās the latest tech giant to announce layoffs, shedding 10,000 employees according to news out on Wednesday. What Does This Mean?First things first, letās 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 companyās only saying goodbye to around 5% of its workforce. Of course, thatās not nothing ā and itās probably a sign that the worldās biggest software companyās growth is slowing. In fact, the firmās 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 todayās 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 ā surprise, surprise ā the firmās stock price followed suit. But now that particular golden era might be fading, so investors will be getting restless, worrying where on earth tomorrowās 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 ā but it wonāt 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 ā well, the effectās not going to be earth-shattering. Thatās why the Fedās watching the real big dogs instead: sectors like hospitality, healthcare, and retail, which employ Americans in droves. | 