Tech layoffs are not a bellwether for broader cuts in other industries, Morgan Stanley analysts say
Small toy figures are seen in front of displayed Facebook’s new rebrand logo Meta in this illustration taken, October 28, 2021.
Dado Ruvic | Reuters
Tech employees at companies from Asana to Amazon and Meta have had their ranks winnowed by massive cuts not seen since the early days of the Covid-19 pandemic, but in a new note, Morgan Stanley analysts say they don’t view these layoffs as a “harbinger of changes” for the broader labor pool.
In a research note sent out Thursday, Morgan Stanley analysts pointed to “idiosyncratic” hiring in tech relative to the rest of the labor market and the outsize market cap of tech firms as two factors in why tech layoffs have had an outsize impact on perceptions.
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But as the analysts noted, tech layoffs since December 2021 “only sum 187,000 […] a sizeable number for the sector [but] barely more than 0.1% of total US payrolls.” Aggressive hiring by tech companies resulted in payrolls at tech and tech-adjacent companies rising “sharply above [their] pre-pandemic level[s],” leading the broader market, which until recently lagged behind 2019 peak employment.
Morgan Stanley still anticipates a “sharp” dropoff in employment growth, citing slower consumer demand precipitated by higher Federal Reserve rates as a trigger for hiring cutbacks “across most sectors of the economy.”
But for those analysts, the likelihood of major job cuts in non-tech industries remains unlikely. Morgan Stanley analysts pointed out the simple reality: “the [U.S.] economy at large remains short-staffed.”
In other words, even if executives may want to trim the blubber, “there appears to be little fat to cut.”
But the perception of cost efficiency and scrupulous hiring practices may be what the market wants to hear, the analysts wrote. For senior executives at internet firms and in the broader markets, “it is important for companies to evaluate how to better manage cash flow” as they adjust to a “slower ’23 world,” the analysts wrote.
For now, though, tech layoffs are not yet “the canary in the coal mine.”
— CNBC’s Michael Bloom contributed to this report.
Oracle CEO Safra Catz speaks at the FII PRIORITY Summit in Miami Beach, Florida, on Feb. 20, 2025.
Joe Raedle | Getty Images
Oracle shares jumped more than 5% after a recent filing showed a cloud deal that would add over $30 billion annually.
CEO Safra Catz is slated to share the deal news at a company meeting Monday, according to a filing with the Securities and Exchange Commission. The revenues are expected to start hitting in the 2028 fiscal year.
“Oracle is off to a strong start in FY26,” Catz is expected to say, according to the filing. “Our MultiCloud database revenue continues to grow at over 100%, and we signed multiple large cloud services agreements including one that is expected to contribute more than $30 billion in annual revenue starting in FY28.”
The deals revealed Monday by Catz will not affect the company’s 2026 guidance, according to the filing.
U.S. President Donald Trump announced on April 4 that he would again postpone enforcement of a law banning TikTok unless its Chinese owner ByteDance divests from the platform.
Vcg | Visual China Group | Getty Images
U.S. President Donald Trump told Fox News in an interview aired on Sunday that he has a group of “very wealthy people” ready to buy TikTok, whose identities he can reveal in about two weeks.
Trump added that the deal will probably need Beijing’s approval to move forward, but said “I think President Xi will probably do it,” in reference to China’s leader Xi Jinping.
The president made the off-the-cuff remarks while discussing the possibility of another pause of his “reciprocal” tariffs on Fox News’ “Sunday Morning Futures with Maria Bartiromo.”
Tiktok’s fate in the U.S. has been in doubt since the approval of a law in 2024 that sought to ban the platform unless its Chinese owner, ByteDance, divested from it. The legislation was driven by concerns that the Chinese government could manipulate content and access sensitive data from American users.
Earlier this month, Trump extended the deadline for ByteDance to divest from the platform’s U.S. business. It was his third extension since the Supreme Court upheld the TikTok law just a few days before Trump’s second presidential inauguration in January. The new deadline is Sept. 17.
The Protecting Americans from Foreign Adversary Controlled Applications Act, of PAFACA, had originally been set to take effect on Jan. 19, after which app store operators and internet service providers would be penalized for supporting TikTok.
TikTok went dark in the U.S. ahead of the original deadline, but was restored after Trump provided it with assurances on the extension.
Trump, who credited the app with boosting his support among young voters in the last presidential election, has maintained that he would like to see the platform stay afloat under new ownership.
Potential buyers that have voiced interest in the app include Trump insiders such as Oracle’s Larry Ellison to firms like AppLovin and Perplexity AI.
However, it’s unclear if ByteDance would be willing to sell the company. Any potential divestiture is likely to require approval from the Chinese government.
A deal that would have spun off TikTok’s U.S. operations and allowed ByteDance to retain a minority position had been in the works in April, but was derailed by the announcement of Donald Trump’s tariffs on China, Reuters reported that month.
The president previously floated a proposal for American stakeholders to buy the company and then sell a 50% stake to the U.S. government as part of a joint venture.
Experts have previously told CNBC that any potential deal could face legal challenges in the U.S., depending on whether it complies with PAFACA.
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