Will 2024 be a boom or a bust for big tech? By one estimate, there have been more than 7,500 layoffs in the sector since the start of the year – a dispersal of pink slips that many hoped would have ceased after the deep job cuts of 2023.
However, as the US’s big tech earnings season gets under way this week, some analysts are predicting strong numbers. This batch of quarterly financial results may show that the industry has cleared out its pandemic-era overhiring and reorganised itself around cloud computing and AI - necessitating cuts in sectors with less rosy prospects. Analysts keen on AI say we are at the start of a tech bull market.
Related: Google boss warns staff to expect further job cuts this year
Since the start of the year, Google has laid off more than a thousand employees across hardware, ad sales, search, shopping, maps, policy, core engineering, Google Assistant and YouTube. The cuts are slight compared to last January, when the Google chief executive, Sundar Pichai, announced a 12,000-worker layoff, but Pichai has warned of more cuts to come.
In an internal memo last week, he told employees that Alphabet was “removing layers to simplify execution and drive velocity in some areas”.
“We have ambitious goals and will be investing in our big priorities this year,” Pichai said in the memo, obtained by the Verge. “The reality is that to create the capacity for this investment, we have to make tough choices.” But the cuts, he added, would not be “at the scale of last year’s reductions, and will not touch every team”.
The Alphabet Workers Union called the layoffs “needless” in a Wednesday post on X (formerly Twitter).
Amazon has also announced a fresh round of job cuts affecting hundreds of employees from its Prime Video and Amazon MGM studios divisions - part of a pullback from an overspend on entertainment and a refocus on core priorities such as online shopping logistics and new ones such as AI.
At Meta, where more than 20,000 jobs were cut last year, the excision of departments appears to have slowed but not stopped. Instagram eliminated a layer of management in mid-January, cutting 60 technical program managers. Last year it said it would add workers to support “priority areas” and shift the workforce composition to include more “higher-cost technical roles”.
And that may be the true story of tech in 2024. If Wedbush analyst Dan Ives is correct, job cuts are mostly done, and earnings season is going to be an occasion to “break out the popcorn”.
“The AI revolution is going to have beneficiaries but also companies that are on the wrong side of it, so they’ve got to cut costs in areas that are not producing revenue and double down on AI,” he says.