Yahoo Finance Big Tech Announces Another Round of Job Cuts As It Continues Its Expensive Efforts To Turn GenAI Into Business Magic
According to data from S&P Global Market Intelligence, Amazon.com Inc (NASDAQ: AMZN), Google-parent Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), Microsoft Corporation (NASDAQ: MSFT), Meta Platforms (NASDAQ: META) and Apple Inc (NASDAQ: AAPL) hold the highest cash and short-term investment balances among nonbanking companies in the S&P 500 community. Although they are not hurting cash-wise, they are also quite careful about their spending.
Amazon and Google-parent Alphabet entered the new year by announcing more layoffs. Last year, Amazon, Google, along with Microsoft, Meta and Salesforce Inc (NYSE: CRM), trimmed their respective workforces by 6% to 13%, but layoffs started back in 2022, costing several thousand employees their jobs.
New Round Of Layoffs Suggests Big Tech Bit Off More It Can Chew
Last week, Google announced its job cuts across engineering and hardware teams as it continues its push for greater efficiency. Although other parts of the tech giant were affected, mostly impacted were workers in hardware, central engineering and Google Assistant voice-activated software product. As it continues to keep up with its rivals, Microsoft and Amazon, Google eliminated about 12,000 jobs last year under the leadership of Sundar Pichai.
The e-commerce and cloud titan, Amazon laid off hundreds across Twitch, Prime Video and MGM Studios divisions, taking the overall job cuts to 27,000. Last year alone, Amazon laid off about 18,000 employees.
Cutting Jobs To Fund AI Efforts
Although it seems like a strange time for job cuts considering that Big Tech ended 2023 by exiting the post-pandemic slump with the recovery of online advertising, Big Tech is in an expensive arms race to build AI services. Therefore, it is not a surprise that Google and Amazon opted to continue the trend of cost-cutting efforts, while streamlining operations and focusing on key projects. But even though this year will bring increased AI spending, its impact on revenue will likely be limited. Although generative AI is expected to pay out big-time, but turning GenAI magic into the desired top and bottom-line business impact will take time. Microsoft gained the early lead in the AI-race thanks to its partnership with the ChatGPT creator, OpenAI, but Amazon and Google are determined to catch up and to do so, they will need to spend their billions wisely.
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