An ambiguous future for technology companies. There is no immunity to pressure and the way out of investing

Despite the negative repercussions of the Corona epidemic on the world economy, technology companies have flourished along with the pandemic and become one of the sectors that has benefited most from what has happened, but now it seems that this exceptional situation is being challenged, as many residents return to work and spend less time at home, at least compared to The long hours and days they spent at home during the pandemic years.
From the point of view of experts, this change is the main reason that the technology sector has suffered huge losses since the beginning of the year, so investors are now afraid that the companies whose profitability figures have been pushed up by the epidemic are starting to lose momentum, especially after the statements by Jeff Bezos, CEO of Amazon, that the boom The technology seen by the epidemic will soon be over.
Apple, for example, which is the most traded technology company by value, saw its market capitalize by more than $ 220 billion in the first half of May, when the Federal Reserve raised interest rates by half a percentage point. .
The company lost its place as the world’s most valuable company earlier this year, contributing to a 13 percent drop in the Nasdaq index last April, and more than 30 percent from its record highs last year.
During three trading sessions in May and due to changes in US interest rates, companies: Apple, Amazon, Microsoft, Google and Meta – the parent company of Facebook – lost more than one trillion US dollars in value, and US reports estimated that the loss of these companies from the beginning of the year to the third week of last May At about $ 2.7 trillion, equivalent to the gross domestic product of the British economy, which ranks fifth in the world.
While the big tech companies in the United States are preparing to release their quarterly earnings reports in the coming days, it is clear that negative news is on the horizon as many companies have announced a slowdown in appointments and retrenchments.
He told The Economist Paul Demin, a financial analyst at the London Stock Exchange: “The present time is not one of the great times for technology companies, and no technology company is immune to pressure caused by rising interest rates, high inflation rates, slowed economic growth, and the prospect of recession. “
He continued, “Probably technology companies will spend less in the coming period, budgets will be reduced, and they will probably stop renting, and it is certain that the third quarter of this year will not have good results.”
This may be the main reason currently for the big sales in the high-growth stock market, and many of these stocks are in the technology industry, where investors are moving their investments and money to relatively safe areas in the US market, amid expectations from those outside the Transferring United States, especially with the guidance of most Experts, is confident that the U.S. economy will slide into a recession in the next 12 months if the U.S. Federal Reserve continues to raise interest rates.
The shifts in the U.S. stock market specifically indicate that retail investors trading in the stock market are gradually losing interest in technology companies, and during the Corona pandemic, about 25 percent of the shares were traded by retail investors, most of whom are people. looking to make a quick profit, and now he has left Half of these investors are stock market with technology companies not meeting their profitability expectations.
Nevertheless, some experts maintain their optimism about the future of technology companies, and their belief that these companies will have no choice but to expand their investments in the markets.
In turn, the dr. Elizabeth Crowall, professor of investment systems at the University of London, explains to the Economist that “giant technology companies have absolute control over some of the most lucrative businesses in the world, such as social media, smartphones, e-commerce, and cloud computing, and their dominance over These areas and the urgent needs of other economic activities for the products of technology companies mean that the chairmen of the boards of these companies will have no choice but to expand their economic activities and acquire smaller ones. .
He continued, “But it will be difficult for them to acquire large or medium-sized companies, because the Federal Trade Commission is studying the acquisition movements by giant technology companies, so we expect the transactions to be mostly in the scope of acquiring small ones. technology companies, the Big Five have a lot of money, including it can benefit from the economic downturn and boost its investments. ”
A number of analysts agree with this view on the grounds that the large cash reserves of giant technology companies enable them to finance rapid repurchases of their shares with low share prices, and this will increase the company’s earnings per share and add value to investors provided. , in addition to sending a message to the markets that their companies are valuable.
Regardless of the relevance of that idea or not, it is noteworthy that during the economic recession between 2008 and 2020, the companies Facebook, Amazon, Google, Apple and Microsoft acquired more than 100 companies and some of those transactions are essential in their activities today.
Some experts believe that the next economic crisis that is currently looming will be the first test for the giant technology companies to the extent that they are affected by infection from each other, as one of the giant technology companies may remain in its position in favor. of expansion, and exploits the period of economic stagnation to its advantage, but it may not.Continue this, because one of the other technology giants was negatively affected by the recession and decided to cut back on its spending.
He told “The Economist” Simon Nelson, an economic researcher, that “despite the competition between technology companies, they are connected, and Apple’s sales may be affected, because Amazon, for example, has decided to reduce its advertising spending that hangs. away from Apple applications. “
He adds, “It does not stop there. There are looming regulatory challenges that could make the future more murky and dark for giant technology companies. European proposals for digital markets, aimed at increasing the openness of digital platforms, will become law soon. “
He pointed out that “these laws could lead to a reduction in the money raised by Apple’s parent company Alpha from Alpha, estimated at $ 19 billion, to make Google’s default search engine on iPhone devices, and if Apple loses that amount ., this means that he loses about 3 cents of his profit before tax.
The debate over the future of US technology companies cannot be ruled out without taking into account that inflation has risen to its highest level in 40 years, the Federal Reserve has begun raising interest rates and will soon reduce its $ 9 trillion balance sheet. an attempt to keep prices in check.
Undoubtedly, these shifts make business markets anxious, as lending will be more expensive for companies and families, and the US Federal Reserve’s policy of raising interest rates may prompt investors to question whether the shares of companies that thrived in a low-income environment interest. rates will be able to continue to succeed in a higher interest rate environment.
And here he told “The Economist” John Kelly, chief investment officer in global equities at Net West Banking Group, “The broad returns on investment in technology companies we’ve seen over the past year have been based in part on monetary policies that support “is from the economy, this situation has changed now, but it is not. This means technology companies will be out of the economic scene.”
He stressed that this will not happen at all, and technology companies will continue to have a privileged position in the markets, because their profits are less sensitive to economic fluctuations, and if the US administration continues with its plans to invest in infrastructure, technology to invest. companies will maintain a good position.

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