Big Tech Sobers Up

“Reports of my death have been greatly exaggerated”- FAANMG, 2023

Revenue was never an issue for the tech giants; Facebook, Apple, Amazon, Netflix, Microsoft, and Google continued their growth streak in recent years. The problem, of course, was earnings. Earnings are everything a company takes home after expenses.

The Nasdaq (an index mostly made up of tech and biotech companies) was down over 33% in 2022. For Wall Street, it wasn’t an income problem, it was a spending problem. Shareholders didn’t like seeing money piddled away on new divisions, experimental tests, and moonshots.

When your partner is on a drunken hot streak at the casino, at some point you should speak up if most of his winnings are being “reinvested” in sucker bets and tips to the cocktail waitress. Last year tech shareholders spoke up.

Meta (the artist formerly known as Facebook) is a prime example of Tech’s renewed focus on shareholder returns. The stock dropped over 60% through 2021-22 as Zuckerberg’s huge bet on the Metaverse cost the company tens of Billions.

Zuck got the message- They slashed spending across several divisions and refocused on their suite of apps that brings in the money: Facebook, Instagram, and Whatsapp. Meta even announced a $40 Billion share buyback program in February. The stock has nearly doubled from January 1.

2023 has been quite the turnaround story for tech: Collectively, the NASDAQ is up 20% YTD.

While coming investment returns remain to be seen, investors should expect, these companies will be taking home more of what they earn for the foreseeable future.