3 tech stocks looking to get leaner in 2024

In 2023, technology companies laid off 262,592 employees, a 69% increase from 2022. This year seems to be following that trend. As of the January 4th update, the New York Fed still forecast a 63% probability of recession based on Treasury spreads.

Moreover, it remains to be seen how the expected rate cuts starting in May will affect the economy in that scenario. To date, the tech company has laid off 23,700 employees. Although this is a 73% decrease compared to January 2023, large-scale layoffs of engineers continue.

Main reason for dismissal

AI integration plays a key role in downsizing. His Bridgepoint Consulting poll of more than 100 industry-leading CFOs found that 33% of respondents expect his AI investments to optimize and reduce labor costs in 2024. We believe it is necessary.

This is in line with a December Resume Builder poll, which found that 38% of companies are likely to continue cutting jobs in 2024 and 52% will freeze hiring for the rest of the year. . Large companies with more than 1,000 employees are less likely to downsize at 39%, compared to 42% for midsize companies.

Typically, the main reason for job cuts is cost reduction (69%), followed by recession concerns (51%), profit increases (42%), and AI integration (39%). With this trend in mind, which public companies will be leaner in 2024?

Salesforce Co., Ltd.

Looking ahead to 2024, Salesforce, Inc. (NYSE:) announced it will cut 1% of its global workforce, or approximately 700 jobs. In 2023, cloud-based customer relationship management (CRM) platforms eliminated 10% of the workforce, or over 7,000 people.

Given its Software-as-a-Service (SaaS) business model, Salesforce derives recurring revenue from subscriptions. By leveraging AI, Salesforce has plenty of room to scale further. The company introduced a key tool, Salesforce Einstein, to process natural language and provide predictive analytics to the business.

In November, Salesforce announced strong results for Q3 FY24, with revenue up 11% year-over-year to $8.72 billion. The company aggressively implemented stock buybacks during the quarter, generating $1.9 billion in profits for shareholders. Salesforce raised his FY24 operating cash flow forecast to 30% to 33% year over year and operating margin to 14.5%.

For comparison, Salesforce’s fiscal 2023 operating margin was 3.3%, with operating cash flow increasing 19% year-over-year. This shows that the company is steadily improving the cost-effectiveness with which it spends its funds to generate each revenue.

Over the past three months, CRM stock has increased 44%. CRM stock is a “Strong Buy” based on the opinions of his 42 analysts. CRM’s average target price is $285.14, while the current price is $282. The highest forecast is $350 and the lowest forecast is $212 per share.

Intel Corporation

The semiconductor multinational made five cuts during 2023, laying off 343 employees. The move is part of a broader effort to cut costs by up to $10 billion by the end of 2025, with further job cuts expected.

At the end of December, Intel Corporation (NASDAQ:) announced its fiscal 2023 earnings, with fourth-quarter revenue increasing $10 year-over-year to $15.4 billion. Although this was better than expected, Intel’s full-year revenue was down 14% year over year. Similarly, Inter’s net income decreased by 79% compared to his 2022.

Mobileye and Intel Foundry Services were the only Intel divisions with increases of 11% and 103%, respectively. However, with continued investment in new technology and AI, INTC could recover from this economic cycle.

Over the past three months, INTC stock has risen 35%. INTC stock is a Buy, based on the opinions of 35 analysts compiled by Nasdaq. INTC’s average price target is $45.78, compared to the current price of $44. The highest prediction is $68 and the lowest prediction is $17.

Alphabet (NASDAQ:), Inc.

Since January 2023, Alphabet Inc. Class C (NASDAQ:) has laid off 12,000 employees, representing 6% of its global workforce. Investors took notice when it became clear that Twitter could cut its workforce by 80% and still function just as well. Alphabet investor TCI was the first to call for layoffs, along with a reduction in “excessive employee compensation.”

Looking ahead to 2024, the company has decided to lay off staff in its Moonshot X lab division and outsource their work instead. The sector was tasked with making technological breakthroughs while “accepting failure as part of the innovation process.” “

This was in addition to the thousands of employees it cut on January 11th. On January 30th, Alphabet is scheduled to announce its fourth quarter 2023 financial results. In the third quarter, the company achieved 11% year-over-year revenue growth, and operating margins rose from his 25% to 28%. Alphabet’s net income rose 41% year over year to $19.7 billion.

GOOGL stock has risen 24% in the past three months. GOOGL stock is a “strong buy” based on the opinions of his 40 analysts compiled by Nasdaq. The average price target is $159, compared to the current price of $152. The highest estimate is $180 per share and the lowest estimate is $140.