Apple, Amazon, Microsoft, and the parent companies of Facebook and Google have lost more than $2 trillion in value so far this year.
What did the companies do about the Wall Street beating? Microsoft has doubled its employees bonus pool, Apple has given $200,000 bonuses to its top hardware talent, and Google has committed to hiring more engineers.
The stock market's relative panic and the tech giant's business-as-usual calm are indicative of a period when analysts, investors and economists predict that the world's largest companies will widen their lead in their respective markets.
The companies have control of some of the world's most lucrative businesses, such as social media, premium smartphones, e-commerce, cloud computing and search, which is why they are bullish about their prospects. Their dominance in those arenas and toeholds in other businesses should blunt the pains of inflation, even as big companies such as Walmart and Target are hit by challenges.
Even if they lose some of their total valuation and their relentless growth of the last few years, Microsoft, Apple, and Amazon are expected to boost hiring, buy more businesses, and emerge on the other side of a bearish economy stronger and more powerful.
The founder of the London-based advisory firm Arete Research said that big tech can sayForget the economy. He said that they can invest through the cycle if they have cash.
The large companies' plans contrast sharply with the rest of the tech sector. The chief executives of unprofitable companies have been forced to cut jobs or consider layoffs because of the steep declines in share prices. As venture capital funding slows, start-ups are cutting their workforces.
According to a tech analyst at Bernstein, those companies will create buying opportunities. The Federal Trade Commission is scrutinizing takeover moves by Facebook, Apple, Amazon, Microsoft and Google, but smaller deals for emerging technology or engineers could be rampant.
According to Refinitiv, during the Great Recession, Facebook, Amazon, Google, Apple and Microsoft acquired more than 100 companies. Apple's acquisition of the chip company P.A. Semi is one of the deals that have become fundamental to the company today.
The poor will get poorer as the big will get bigger, said Michael Cusumano, deputy dean of the Massachusetts Institute of Technology.
This sense of invulnerability has some limitations. If the economy continues to get worse, the plans of the big companies could change. Some companies are more vulnerable than others.
Facebook's parent company, Meta Platforms, is facing long-term challenges that have made it worse than its peers. It has posted falling profits as its user growth slows amid rising competition from TikTok and changes in Apple's privacy policy.
Meta's chief executive has instituted a temporary hiring freeze for some roles. Employees asked if layoffs would follow during a recent all-hands meeting. The company's current plans are unlikely in the future, according to a spokesman. He said the company was focused on slowing spending and limiting growth.
After disappointing results, Amazon sent a similar signal to its employees. In a call with analysts, Brian Olsavsky, the company's finance chief, said Amazon would look to corral costs after it doubled spending on warehouses and staff. The company has more space and staff than it needs because people are making less Amazon purchases when they return to work.
Amazon Web Services, or A.W.S., continues to make money. The company plans to increase its spending on data centers in the months ahead. The base compensation of its corporate staff will be raised to $350,000 from $160,000. The plan is to launch 38 rockets into space to build a satellite broadband network.
According to an investment firm specializing in tech research, at the end of March, Facebook, Microsoft, Google, Apple and Amazon had nearly $300 billion in total cash.
As share prices fall, the cash reserves could be used to fund accelerated stock purchases. Doing so would increase the companies earnings per share, deliver more value to investors and signal to the market that their firms are more valuable than Wall Street is willing to acknowledge.
The companies were ahead of the game as people were sequestered at home. Customer orders soared on Amazon for everything from hand sanitizer to Instant Pots. Stores that were closed shifted sales online. Students and employees in remote areas spent money on new technology.
Microsoft is bucking the trend of cutting ranks during a downturn. Emboldened by a business that has proved more durable than its peers, Microsoft is increasing its investments in cloud computing, and is standing by a $70 billion acquisition of the video game publisher, which it expects to increase sales for its gaming empire.
Similar resilience has been seen at both companies. According to CNBC, the new performance review process at the company was overhauled and staff were told they would likely get pay increases. It plans to increase its spending on data centers.
Tim Cook, Apple's chief executive, believes that the company should invest for the future during a downturn. During the Great Recession, it nearly tripled its sales. Some hardware engineers have had their bonuses increased by as much as $200,000.
John Chambers, the former chief executive of Cisco Systems, said that companies with strong businesses and deep pockets could afford to take risks that would be difficult for smaller competitors. He said that during the 2008 downturn,Cisco allowed distressed automakers to pay for technology services with credit. He said that the company risked having to write down $1 billion in inventory, but emerged from the recession as the dominant provider to a healthy auto industry.
Mr. Chambers said that companies break away during downturns.
David Yoffie is a professor at Harvard Business School. He said that previous downturns showed that even the strongest businesses were prone to pulling back.
The first test for the biggest companies in tech will be their peers. Amazon's shares in the electric vehicle maker have plummeted. App developers rely on venture capital funding to finance their marketing, which is likely to affect Apple's services sales. Analysts and cloud executives said that start-ups are scrutinizing their spending on cloud services, which will likely slow growth for Microsoft and others.
Sam Ramji is the chief strategy officer at DataStax, a data management company.
The big tech companies could face regulatory challenges. The Digital Markets Act is designed to increase the openness of tech platforms. Bernstein estimates that the change could wipe out as much as 3 percent of the company's gross profit.
The companies are expected to challenge the law in court. Big Tech is going to be more powerful if it gets bogged down. What is being done about it? Mr.Kramer of Arete Research said nothing.
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