Big tech companies achieve record profits in 2023 after cutting their workforce | Economy

The formula for Big Tech's historic record profits in 2023 combines a dose of income growth with another dose of cost containment. Although each company's results tell slightly different stories from one another, AI is becoming a driver of growth on the revenue side. Because of the expense, the tech giants…

The formula for Big Tech's historic record profits in 2023 combines a dose of income growth with another dose of cost containment. Although each company's results tell slightly different stories from one another, AI is becoming a driver of growth on the revenue side. In terms of expenses, giant tech companies cut jobs on a massive and unprecedented scale of 46,000 jobs last year.

Apple, Microsoft, Alphabet, Meta and Amazon together generated $326,772 million (about 300,000 million euros at the current exchange rate), a record that exceeds the previous year's figure by 25.6% and exceeds the overall record for 2021. It rose by 8.3% to $1.63 trillion, in this case It was somewhat affected by Apple, which saw a decline in revenue in 2023, mainly due to the negative development in China.

In addition, the big tech companies said goodbye to 2023 at their best. In the fourth quarter, the period of greatest economic activity, revenues rose 11.9% to $478 billion, and profits rose 55.6% to $101,114 million.

Results reports and presentations to analysts by senior executives have been laden with references to AI, and simultaneously turned into a business opportunity, a revenue stream, and a battleground for Big Tech.

The company that surfs the new technology wave best is Microsoft. The company led by Satya Nadella has become the most valuable in the world with a capitalization exceeding three billion dollars thanks to OpenAI and the integration of artificial intelligence into its products and services. Its fiscal year ends in June, but in calendar year 2023 the company increased its sales by 11.5%, to a record $227,583 million, and its profits by 22.4%, to $82,541 million.

In the fourth quarter of 2023, billings and results grew at rates of 17.6% and 33.2%, respectively, by impressive margins. “It was a record quarter,” Nadella stressed at the conference with analysts, highlighting the strength of Microsoft Cloud, the cloud computing unit that already accounts for more than half of its revenue. “We have moved from talking about AI to implementing it at scale. By integrating AI into every layer of our technology, we are winning new customers and helping realize new benefits and productivity gains. The company believes the new technology will transform business and benefit This is the moment for AI to redefine its role in business applications, with the idea that AI will become a prominent part of every personal computer this year.

Microsoft has taken the lead over Alphabet, which initially seemed better placed to lead the new technology. The company continues to rely heavily on advertising revenue from its Google search engine and YouTube video service, although it is also betting on cloud computing and data centers. The group increased its turnover by 8.7% to a new high of $307,394 million in 2023 and improved its profits by 23% to $73,795 million, somewhat below the record set in 2021. In the fourth quarter, its profits accelerated and improved by 52%. %. Up to $20,687 million.

In conferences with analysts over the past year, Alphabet CEO Sundar Pichai has sounded a bit defensive, trying to show off the progress the group has made in new technology: “We've been leading the use of AI to improve many of our products, from search to advertising.” . Through most of our businesses and consumer products, we are already helping billions of people, he insisted this week at the Results Conference.

Cost containment

Pichai also stressed cost containment: “We are disciplined in the way we run the company. You have already heard me talk about our efforts to constantly redesign our cost base and improve our speed and efficiency. This work continues. Teams are working to focus on key priorities and act quickly,” he said. , removing layers and simplifying its organizational structures.” He did not mention it, but Alphabet reduced its workforce for the first time in 2023, from 190,200 to 182,500 employees.

The person who takes the cake in cost containment is the meta. Mark Zuckerberg announced that 2023 will be the year of belt tightening. The company reduced its workforce by 22.2%, from 86,500 to 67,300 employees, and reduced rental expenses and delayed investments. At the same time, its income grew strongly, thanks to improved ad management using AI tools and attracting traffic and demand itself. Revenues increased by 15.7% to 134.902 million. Thus, its profits rose by 69%, to $39.098 million, despite the multi-million dollar losses it incurred in the Metaverse and augmented reality. The company declared a dividend and expanded its stock buyback plans, and the stock market rose more than 20% on Friday.

“2023 was our year of efficiency, as we focused on making Meta a stronger technology company and improving our business to give us the stability needed to achieve our ambitious long-term vision for AI and the Metaverse. Last year, we not only achieved our efficiency goals, but we returned to Strong revenue growth.”

Apple presented its results on the eve of the launch of its Vision Pro smart glasses, and said: “At Apple, we live moments like these. That’s why we do what we do.” Tim Cook, the company’s CEO, said at the conference with analysts: “That’s why we are very committed to innovation and very focused.” “On pushing technology to the limits.” Cook announced the results of the first quarter of the fiscal year in which the company returned to the growth path after four quarters of decline. In the full calendar year 2023, Apple’s sales volume reached 385.706 million, which is 0.5% less than It was in 2022. Despite this, its profits increased by 6% in those 12 months, to 100.913 million, a new record.

Apple is another company that seems to have fallen a little behind Microsoft in the field of artificial intelligence, but it expects new developments: “We will continue to invest in technologies that will shape the future. “This includes artificial intelligence, to which we continue to devote a tremendous amount of time and effort, and we will be very happy to share details of our ongoing work in this area later this year,” he said. Analysts have asked him several times, but Cook has been evasive: “We have some things we're excited about that we'll talk about later this year.” “Let me just say that I think there's a huge opportunity for Apple with AI and generative AI, without going into too much detail or getting ahead of ourselves,” he apologized.

Amazon, a big tech revenue leader thanks to its e-commerce business, has also combined AI-driven revenue gains (including growth of its data and compute unit, AWS), with cost-containment efforts similar to its predecessor. Andy Jassy, ​​CEO. Jassy has tried to combat the open bar culture at Amazon, in which for many years the important thing was growth at all costs. The company ended 2023 with 16,000 fewer employees than the previous year and continues to cut jobs in some areas. The 12% increase in sales, up to 574.785 million in the year, combined with cost control, allowed the company to earn 30.722 million in 2023 with the best operating results in its history.

Of course, in his conference with analysts, he also talked about AI: “Generative AI has been and will continue to be an area of ​​widespread interest and investment at Amazon, mainly because there are few, if any, initiatives that give us an opportunity to recreate… “Innovating more of our customers' experiences and processes, we believe, will ultimately generate tens of billions of dollars in revenue for Amazon in the coming years.”

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