The massive job cuts in tech are not over yet. That, according to DA Davidson analyst Tom Fort, who said the latest wave of bank failures, including those of Silicon Valley Bank and Signature Bank, could portend new challenges for the tech industry.
“To the extent that banking turmoil leads to a recession or more downturn, I think you will see another layoff in big tech,” Fort told Yahoo Finance Live.
Amazon (AMZN) CEO Andy Jassi announced on Monday that the e-commerce giant will cut 9,000 jobs across its Amazon Web Services (AWS), People Experience and Technology Solutions (PTX), advertising and Twitch teams. This is in addition to the 18,000 jobs the company cut in January.
“Given the instability of the economy in which we live and the looming uncertainty, we have decided to further rationalize our costs and workforce,” Yassi wrote in a letter to employees.
Amazon, which has seen sluggish sales across its e-commerce and AWS divisions in recent quarters, posted a net loss of $2.7 billion for 2022.
The decline in AWS revenue is a result of the company's sales structure, which allows customers to cut usage when needed, saving money and reducing Amazon's revenue stream, Forte said.
"Today is March 20th and they're doing another round of cuts that shows things aren't going as well at Amazon, including the high-yield cloud computing and ad business," he said.
It's not just layoffs. Fort, which has a Buy rating and a price target of $143, said Amazon cut about 100,000 jobs due to downsizing its e-commerce business in March and June last year.
And you can't beat the Amazon. If the economy slows down, which Forte says is likely to happen, the company may have to cut more jobs.
Amazon isn't the only company to double down on its cuts. On March 14, Meta (META) announced that it would cut another 10,000 jobs in addition to cutting 11,000 in November 2022. CEO Mark Zuckerberg also announced that the company will cut 5,000 unfilled jobs.
In January, Alphabet (GOOG, GOOGL) and Microsoft (MSFT) cut 10,000 and 12,000 jobs, respectively.
The measures are part of a wider cost-cutting effort in Silicon Valley after companies hired thousands of new employees during the pandemic, assuming consumers will continue to spend their lives at home and online rather than in the real world.
Daniel Hawley , technology writer for Yahoo Finance. Follow him @Daniel Hawley
Click here for business and monetary news
Read the latest financial and business news from Yahoo Finance