The year that brought the high-tech industry back to reality
On its first day of trading in 2022, Apple hit a milestone by becoming the first publicly traded company to reach a $3 trillion market cap. Microsoft and Google are not far behind. The tech giant is expected to hit $5 trillion in the near future.
The technology industry, which plays a major role in Covid-19, is expected to grow rapidly in 2022. The rise of Omicron mutations is a sign of increasing demand for technology equipment and services. The numbers have helped many companies figure this out. Loan rates close to 0% give startups access to high-quality capital that is often reserved for venture capital.
However, 2022 did not end as expected. A number of factors caused the technology sector to plummet again, becoming one of the hardest-hit industries this year.
Workers at an Amazon warehouse in upstate New York, USA, in late 2020. A photo: Reuters.
In 2022, demand for technology products will change, inflation and interest rates will rise, and fears of an economic recession will force consumers and advertisers to limit spending, which will directly impact the business health of many technology companies.
As a result, tech companies are suffering losses unprecedented in the last 10 years. Tech stocks plummeted and tens of thousands of workers were laid off, even at big companies like Amazon, HP and Meta. The world of cryptocurrencies is on the verge of collapse. The tech industry, once known for investing in ambitious and risky projects, is taking a number of cost-cutting steps by closing off unused areas.
The title of world’s richest man, once held by billionaire Elon Musk, was also bestowed on luxury brand LVMH chairman Bernard Arnault after Musk’s purchase of Twitter prompted many investors to invest in electric carmaker Tesla.
After CNN, which not only dispelled the tech industry’s “champion” mentality, but also put an end to many industry myths. Silicon Valley has hailed tech leaders as visionary trailblazers for years, but the year 2022 has forced many of them to face harsh realities they couldn’t have predicted two years into the future.
“Unfortunately, things didn’t go the way I hoped,” founder Mark Zuckerberg wrote in a memo to employees in November, as Meta laid off 11,000 employees. He’s not the only one struggling with this disease.
When the pandemic hit in early 2020, tech companies thrived as more people were forced to stay at home and work remotely. Facebook has nearly doubled its workforce and is spending billions on bets like the Metaverse. Amazon has also hired a large number of employees and doubled its fulfillment centers to meet the growing demand for online shopping.
“The world quickly went online when Covid-19 hit, the e-commerce boom has resulted in unprecedented sales growth. Many people hope that this momentum will continue in the long term even during the pandemic. We also share this opinion and have decided to significantly increase investments,” said Zuckerberg.
In 2022, the market then started to move strongly.
“Society has a hard time predicting the future, we often think that what is happening now will continue into the future. But in reality, a pandemic is just an extraordinary event, and no one knows what will happen after that,” commented Angela Lee, professor of venture capital and strategy at Columbia Business School.
A number of Silicon Valley executives are beginning to admit they are growing their companies too fast or exaggerating the acceleration in growth due to Covid-19. Apple’s market value is now over $2 trillion, and Amazon’s stock has also lost about 50% of its value. Meta stocks took an even bigger hit, losing two-thirds of their value and turning a company worth more than $1 trillion into the underperforming business of many U.S. supermarket chains in 2021.
Data from analytics firm CB Insights shows that an average of more than two startups valued at $1 billion or more will be formed every business day in 2021. early 2020.
Lee, founder of investment network 37 Angels, said he was ready to do more business with startups in 2021 but wouldn’t do so in 2022. “I’ve heard the same thing from a lot of people,” he added. .
Professor Li said the current austerity situation is affecting many tech companies, but could be good for the industry as a whole. Such regulations would eliminate redundant business and ensure the survival of financially viable companies.
“A lot of people think the tech industry apocalypse is coming, but I see this as a return to normal. I don’t think investing in the tech industry is going to stop, it’s just going to end the madness. in recent years,” he said.
dive app (After CNN)