Alphabet is reportedly ready to cut 12,000 jobs worldwide.
The company wants to cut costs and focus on AI.
Traders believe that job cuts would boost Alphabet’s profitability.
Big Tech Companies Keep Cutting Jobs
Big tech companies adjust their workforce as they prepare for a challenging year. According to a Reuters report, Google’s parent Alphabet would cut 12,000 jobs worldwide.
The report indicated that Alphabet’s CEO Sundar Pichai noted that economic situation had changed compared to the previous two years. The company is currently focused on AI and wants to cut costs in order to pay more attention to the key priorities.
Tech companies were hiring aggressively during the acute phase of the coronavirus pandemic. The situation has changed, and these companies prepare for a material slowdown of the economy, so they have to adjust the size of their workforce.
Alphabet Stock Rallies As Traders Cheer Job Cuts
Alphabet stock is up by more than 4% in today’s trading session as traders bet that the company’s decision to cut jobs will boost its financial performance.
Market participants believe that tech companies hired too many employees during the coronavirus pandemic. The market does not expect that layoffs will have any material impact on the tech companies’ performance. Instead, traders expect that job cuts will soon lead to higher earnings.
Interestingly, traders are not worried that layoffs in the tech space may signal that recession would be severe. Market participants look ready to bet on a “soft landing” for the economy, which is bullish for tech stocks.
Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.