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Visitors take photos in front of the Meta sign at its headquarters in Menlo Park, California, December 29, 2022.

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Technology companies are learning an old lesson from Wall Street: maturing means shrinking.

Meta and Amazon saw their shares spike on Friday following their fourth-quarter earnings reports. While revenue for both topped estimates, the story for investors is that they’re showing their ability to do more with less, an alluring equation for shareholders.

There’s also a recognition that investors value cash, in many cases, above all else. The tech industry has long preferred to reinvest excess cash back into growth, ramping up hiring and experimenting with the next big thing. But following a year of hefty layoffs and capital preservation, Meta on Thursday announced that, for the first time, it will pay a quarterly dividend of 50 cents per share, while also authorizing an additional $50 billion stock repurchase plan.

“The key with these companies is really that they’re able to reinvent themselves,” said Daniel Flax, an analyst at Neuberger Berman, in an interview with CNBC’s “Squawk Box” on Friday. They “continue to invest for the future and play offense while at the same time manage expenses in this tough environment,” he said.

Neuberger Berman's Dan Flax breaks down Big Tech earnings results

Amazon is less aggressively moving to send cash to shareholders, but the topic is certainly being discussed. The company instituted a $10 billion buyback program in 2022 and hasn’t announced anything since. On Thursday’s earnings call, Morgan Stanley analyst Brian Nowak asked about plans for additional capital returns.

“Just really excited to actually have that question,” finance chief Brian Olsavsky said in response. “No one has asked me that in three years.”

Olsavsky added that “we do debate and discuss capital structure policies annually or more often,” but said the company doesn’t have anything to announce. “We’re glad to have the better liquidity at the end of 2023 and we’re going to try to continue to build that,” he said.

After years of seemingly unfettered growth, the biggest internet companies in the world are firmly into a new era. They’re still out hunting for the best technical talent, particularly in areas like artificial intelligence, but headcount growth is measured. Staffing up in certain parts of the business likely means scaling back elsewhere.

‘Playing to win’

For example, Meta CEO Mark Zuckerberg told investors that when it comes to AI, “We’re playing to win here and I expect us to continue investing aggressively in this area in order to build the most advanced clusters.”

Later on the call, when asked about expanding headcount, Zuckerberg said new hiring will be “relatively minimal compared to what we would have done historically,” adding that, “I kind of want to keep things lean.” 

Olsavsky said most teams at Amazon are “looking to hold the line on headcount, perhaps go down as we can drive efficiencies in the size of our business.”

The story is playing out across Silicon Valley. January was the busiest month for tech job cuts since March, according to the website Layoffs.fyi, with almost 31,000 layoffs at 118 companies. Amazon and Alphabet added to their 2023 job cuts with more layoffs last month, as did Microsoft, which eliminated 1,900 roles in its gaming unit shortly after closing the acquisition of Activision Blizzard.

SAN FRANCISCO, CALIFORNIA – JUNE 23: XBOX CEO Phil Spencer arrives at federal court on June 23, 2023 in San Francisco, California. Top executives from Microsoft and Activision/Blizzard will be testifying during a five day hearing against the FTC to determine the fate of a $68.7B merger of the two companies. (Photo by Justin Sullivan/Getty Images)

Justin Sullivan | Getty Images News | Getty Images

Downsizing this week hit the cloud software market, where Okta announced it was cutting about 400 jobs, or 7% of its staff, and Zoom confirmed it was eliminating less than 2% of its workforce, amounting to close to 150 positions. Zuora announced a plan to cut 8% of jobs, or almost 125 positions based on the most recent headcount figures.

Evan Sohn, chairman of Recruiter.com, called it a “very confusing job market.” Last year, tech companies were responding to dramatically changing market conditions — soaring inflation, rising interest rates, rotation out of risk — after an extended bull market. Meta slashed over 20,000 jobs in 2023, Amazon laid off more than 27,000 people, And Alphabet cut over 12,000 positions.

The economy is in a very different place today. Growth is back at a healthy clip, inflation appears under control and the Federal Reserve is indicating rate cuts are on the horizon this year. Unemployment held at 3.7% in January, down from 6.4% three years earlier, when the economy was just opening up from pandemic lockdowns. And nonfarm payrolls expanded by 353,000 last month, the Labor Department’s Bureau of Labor Statistics reported Friday. 

Tech stocks are booming, with Meta, Alphabet and Microsoft all at or near record levels.

But the downsizing in the industry continues.

“Companies are still in the cleanup from ’23,” Sohn told CNBC’s “Worldwide Exchange” this week. “There could be a flipping of skills, different skills necessary to really handle the new world of 2024.”

Recent layoffs are fueled by changing skills and push for AI, says Recruiter.com's Evan Sohn

Wall Street is rewarding tech companies for improved discipline and cash distribution, but it raises the question about where they can turn for significant growth. Other than Nvidia, which had a banner 2023 due to soaring demand for its AI chips, none of the other mega-cap tech companies have been growing at their historic averages.

Even Meta’s better-than-expected 25% growth for the fourth quarter is a bit misleading, because the comparable number a year ago was depressed due to a slowing digital advertising market and Apple’s iOS update, which made it harder to target ads. Finance chief Susan Li reminded analysts on Thursday that as 2024 progresses, the company will be “lapping periods of increasingly strong demand.”

By late this year, analysts are projecting growth at Meta will be back down to the low teens at best. Growth estimates for Amazon and Alphabet are even lower, a good indication that calls for capital allocation measures may only get louder.

Ben Barringer, technology analyst at Quilter Cheviot, told CNBC that Meta’s decision to pay a dividend was a “symbolic moment” in that regard.

“Mark Zuckerberg is showing that he wants to bring shareholders along with him and is highlighting that Meta is now a mature, grown-up business,” Barringer said.

— CNBC’s Annie Palmer contributed to this report

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Amazon Web Services is building equipment to cool Nvidia GPUs as AI boom accelerates

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Amazon Web Services is building equipment to cool Nvidia GPUs as AI boom accelerates

The letters AI, which stands for “artificial intelligence,” stand at the Amazon Web Services booth at the Hannover Messe industrial trade fair in Hannover, Germany, on March 31, 2025.

Julian Stratenschulte | Picture Alliance | Getty Images

Amazon said Wednesday that its cloud division has developed hardware to cool down next-generation Nvidia graphics processing units that are used for artificial intelligence workloads.

Nvidia’s GPUs, which have powered the generative AI boom, require massive amounts of energy. That means companies using the processors need additional equipment to cool them down.

Amazon considered erecting data centers that could accommodate widespread liquid cooling to make the most of these power-hungry Nvidia GPUs. But that process would have taken too long, and commercially available equipment wouldn’t have worked, Dave Brown, vice president of compute and machine learning services at Amazon Web Services, said in a video posted to YouTube.

“They would take up too much data center floor space or increase water usage substantially,” Brown said. “And while some of these solutions could work for lower volumes at other providers, they simply wouldn’t be enough liquid-cooling capacity to support our scale.”

Rather, Amazon engineers conceived of the In-Row Heat Exchanger, or IRHX, that can be plugged into existing and new data centers. More traditional air cooling was sufficient for previous generations of Nvidia chips.

Customers can now access the AWS service as computing instances that go by the name P6e, Brown wrote in a blog post. The new systems accompany Nvidia’s design for dense computing power. Nvidia’s GB200 NVL72 packs a single rack with 72 Nvidia Blackwell GPUs that are wired together to train and run large AI models.

Computing clusters based on Nvidia’s GB200 NVL72 have previously been available through Microsoft or CoreWeave. AWS is the world’s largest supplier of cloud infrastructure.

Amazon has rolled out its own infrastructure hardware in the past. The company has custom chips for general-purpose computing and for AI, and designed its own storage servers and networking routers. In running homegrown hardware, Amazon depends less on third-party suppliers, which can benefit the company’s bottom line. In the first quarter, AWS delivered the widest operating margin since at least 2014, and the unit is responsible for most of Amazon’s net income.

Microsoft, the second largest cloud provider, has followed Amazon’s lead and made strides in chip development. In 2023, the company designed its own systems called Sidekicks to cool the Maia AI chips it developed.

WATCH: AWS announces latest CPU chip, will deliver record networking speed

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Bitcoin rises to fresh record above $112,000, helped by Nvidia-led tech rally

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Bitcoin rises to fresh record above 2,000, helped by Nvidia-led tech rally

The logo of the cryptocurrency Bitcoin can be seen on a coin in front of a Bitcoin chart.

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Bitcoin hit a fresh record on Wednesday afternoon as an Nvidia-led rally in equities helped push the price of the cryptocurrency higher into the stock market close.

The price of bitcoin was last up 1.9%, trading at $110,947.49, according to Coin Metrics. Just before 4:00 p.m. ET, it hit a high of $112,052.24, surpassing its May 22 record of $111,999.

The flagship cryptocurrency has been trading in a tight range for several weeks despite billions of dollars flowing into bitcoin exchange traded funds. Bitcoin purchases by public companies outpaced ETF inflows in the second quarter. Still, bitcoin is up just 2% in the past month.

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Bitcoin climbs above $112,000

On Wednesday, tech stocks rallied as Nvidia became the first company to briefly touch $4 trillion in market capitalization. In the same session, investors appeared to shrug off the latest tariff developments from President Donald Trump. The tech-heavy Nasdaq Composite notched a record close.

While institutions broadly have embraced bitcoin’s “digital gold” narrative, it is still a risk asset that rises and falls alongside stocks depending on what’s driving investor sentiment. When the market is in risk-on mode and investors buy growth-oriented assets like tech stocks, bitcoin and crypto tend to rally with them.

Investors have been expecting bitcoin to reach new records in the second half of the year as corporate treasuries accelerate their bitcoin buying sprees and Congress gets closer to passing crypto legislation.

Don’t miss these cryptocurrency insights from CNBC Pro:

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Perplexity launches AI-powered web browser for select group of subscribers

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Perplexity launches AI-powered web browser for select group of subscribers

Dado Ruvic | Reuters

Perplexity AI on Wednesday launched a new artificial intelligence-powered web browser called Comet in the startup’s latest effort to compete in the consumer internet market against companies like Google and Microsoft.

Comet will allow users to connect with enterprise applications like Slack and ask complex questions via voice and text, according to a brief demo video Perplexity released on Wednesday.

The browser is available to Perplexity Max subscribers, and the company said invite-only access will roll out to a waitlist over the summer. Perplexity Max costs users $200 per month.

“We built Comet to let the internet do what it has been begging to do: to amplify our intelligence,” Perplexity wrote in a blog post on Wednesday.

Perplexity is best known for its AI-powered search engine that gives users simple answers to questions and links out to the original source material on the web. After the company was accused of plagiarizing content from media outlets, it launched a revenue-sharing model with publishers last year.

In May, Perplexity was in late-stage talks to raise $500 million at a $14 billion valuation, a source familiar confirmed to CNBC. The startup was also approached by Meta earlier this year about a potential acquisition, but the companies did not finalize a deal.

“We will continue to launch new features and functionality for Comet, improve experiences based on your feedback, and focus relentlessly–as we always have–on building accurate and trustworthy AI that fuels human curiosity,” Perplexity said Wednesday.

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Perplexity CEO on AI race: The market of providing answers to questions will become a commodity

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