The fall in the markets since January affects almost all investors.
Apart from the defensive sectors and energy, the rest of the economy is impacted by the uncertainties surrounding growth.
The aggressive increase in interest rates by the Federal Reserve to crush inflation, which is at its highest in 40 years, has raised fears of a sharp slowdown in economic activity. These fears are a bad blow for growth assets like tech groups that are bets on the future.
Unsurprisingly, tech groups have been struggling for several months. The same tech companies didn’t help matters by issuing dire warnings about the economic situation.
“We are being a bit more responsible through one of the toughest macroeconomic conditions underway in the past decade, I think it’s important that as a company, we pull together to get through moments like this,” Sundar Pichai, chief executive officer of Alphabet (GOOGL) told employees last month.
Big Tech Wrecked
Google’s parent company is in austerity mode: the company has canceled the next version of its Pixelbook laptop and dissolved the team responsible for building it. It has also made cuts at its Area 120 tech incubator whose goal was to keep some of the company’s talent in-house.
The Mountain View, Calif.-based firm has also cut several perks, travel and entertainment budgets.
“For the first 18 years of the company, we basically grew quickly basically every year, and then more recently our revenue has been flat to slightly down for the first time,” Meta Platforms’ (META) CEO Mark Zuckerberg told employees on Sept. 30.
He added that the company, which employed 83,553 people as of June 30, up 32% from 63,404 as of June 30, 2021, will be “somewhat smaller” by the end of 2023.
These various cost reduction measures seem to mark the end of a glorious era for Silicon Valley, which in recent years has become the favorite destination for talent. After having been one of the great beneficiaries of the covid-19 pandemic, tech is today one of the biggest victims of the downturn in growth.
There is also another way to look at the disaster caused to the sector by the current economic uncertainty: the fortunes of tech billionaires.
Musk, Bezos, Gates, Zuck All in the Red
In the Bloomberg Billionaires Index‘s top 25 fortunes, there are nine U.S. tech billionaires, six of whom are in the top 10. As of Oct. 11, these nine billionaires have together lost $373 billion in personal wealth since January.
Mark Zuckerberg, CEO of social media giant Meta Platforms, is the one whose fortunes have shrunk the most. It has lost $77.1 billion since January.
Next come the two richest men in the world. Elon Musk, CEO of Tesla (TSLA) , the world’s largest fortune, lost $64.7 billion. Jeff Bezos, the founder of Amazon (AMZN) is worth $57.4 billion less than at the beginning of January.
Bill Gates, the co-founder of Microsoft (MSFT) and the fifth-richest person in the world, lost $33.4 billion, while Steve Ballmer, the former CEO of the software giant, saw his fortune decrease by $24.7 billion. Ballmer is the tenth richest in the world.
Larry Page, the seventh richest on the planet and co-founder of Alphabet, is worth $38.4 billion less than in January, while Sergey Brin, the other co-founder of the internet giant saw his fortune drop by $37.3 billion. Brin is ranked 8th world’s richest person.
Finally, Larry Ellison, the founder of Oracle (ORCL) and eleventh richest man in the world, has seen his net wealth decrease by $27.9 billion since January, while that of Michael Dell, founder of Dell Technologies (DELL) and 25th richest man in the world, is worth $12.1 billion less compared to January.
The fortunes of these tech billionaires are mainly based on their actions within their companies. Some will say that the decline in their wealth is a return to normal after it soared during the pandemic.
Interestingly, only six people in the top 25 wealthiest people on the planet have seen an increase in their wealth since January.
Among them is Chinese tech tycoon Zhang Yiming, whose wealth has increased by $10.4 billion since January, making him the 20th-richest person on the planet. He is the founder of Bytedance, the parent company of popular short video platform TikTok and its Chinese version Douyin.