The tech space had a difficult time last year, with companies like Meta (META), Amazon (AMZN) and Microsoft (MSFT) grappling with economic headwinds and mass layoffs. IBM Vice Chairman Gary Cohn told Yahoo Finance Live that the sector “understood that we were going into a tougher economic situation.”
“We’ve seen the technology sector taking pretty aggressive action in rightsizing their companies; trying to figure out where the economy is going,” The Former Director of the National Economic Council explains. “And the market has responded,” he continues.
“Technology has been a good place to be so far in 2023,” Cohn says; adding “I think the biggest companies at the end of the day will be the winners in this space.”
You can watch Julie Hyman and Brad Smith‘s full interview with Gary Cohn here.
Key Video Moments:
00:00:02 – Tougher economic situation
00:00:56 – Tech rightsizing
00:01:24 – Tech is a good place to be in 2023
Video Transcript
GARY COHN: The tech world as a whole, I think, understood that we were going into a tougher economic situation. Many of the companies got down to the fundamental basics of how they ran their companies. Most of the tech companies, Silicon Valley related especially, really grew significantly during the crisis, during the– I’m sorry– during the pandemic.
They were the ones doing massive hiring. They were growing. They were growing exponentially, some of them. I think as we got into 2023, many of them said, hey, look, we just can’t grow in a headcount, we just can’t grow at all cause. We have to rightsize our business. We have to rightsize our footprint.
We’re going to have to get ourselves into a more competitive posture. And that may mean making tough decisions and downsizing on headcounts. And we’ve seen a lot of that. We’ve seen a lot more layoffs coming out of the technology sector as a whole than almost any other sector.
So we’ve seen the technology sector taking pretty aggressive actions in rightsizing their companies, trying to figure out where the economy is going, where the demand’s going, how they’re going to continue to grow, how they’re going to continue to be good shepherds of capital for their shareholders. And the market has responded by rewarding those stocks because management has gotten in front of the newfound emphasis on making sure shareholder returns are adequate.
So, you know, technology has been a good place to be, so far, in 2023. I still feel like it is a good place to go. We are a technology-driven country. We continue to find new areas. You know, the whole AI, machine-learning space, it’s a space that people in the industry have known about it for a decade-plus, but it’s now becoming a very retail piece of the equation.
So we continue to see new routes of evolution, new routes of expansion in the whole technology world. And I think the biggest companies, at the end of the day, will be the winners in this space.
