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An employee cleans a window at Apple Inc.’s new Canton Road store in the Tsim Sha Tsui district of Hong Kong, China.

Xaume Olleros | Bloomberg | Getty Images

Many of the biggest technology companies are laying off staff as fears of a recession rises. But the job cuts come after a few years of rapid expansion.

On Wednesday, Microsoft announced it will eliminate 10,000 employees, reducing its workforce by 5%, and Amazon began conducting layoffs that will eventually slash 18,000 jobs.

Microsoft and Amazon are joining tech industry peers including Alphabet and Meta which have also cut staff in recent months.

While each company is slightly different, most companies going through layoffs are blaming macroeconomic conditions and the possibility of a future recession as the reason for their belt-tightening.

But an underappreciated factor is how rapidly tech companies ramped up hiring over the last two years.

In 2020, widespread Covid lockdowns made internet applications more important to people, supercharging business for many tech companies. As sales and profit continued to rise in 2021, they continued to add huge numbers of employees in the hopes that the success they were seeing would become a new baseline. It didn’t work out that way. Growth is slowing, and companies are now having to readjust.

Apple is a major exception: It did not appreciably increase its rate of hiring over the last two years, and also has not announced any layoffs.

A review of SEC filings shows how rapidly the other biggest tech companies grew during the pandemic.

Microsoft had 221,000 full time employees at the end of June 2022, the most recent official figure that’s available. That was a 40,000 employee jump from the same time in 2021, a 22% percent increase in staff. The year before that, Microsoft added 18,000 employees, an 11% increase.

In a note about Microsoft layoffs, Wedbush analyst Dan Ives said that the tech sector had to spend money during the pandemic to keep up with elevated demand.

“Redmond needed to aggressively hire along with the rest of the tech sector and spend money like 1980’s Rock Stars to keep pace with eye-popping demand,” Ives wrote in a Wednesday note.

Amazon is more complicated than Microsoft because it has a huge hourly workforce for its warehouses, as well as the corporate office employees seen in most tech companies.

Still, Amazon grew voraciously in 2021, adding 310,000 jobs. That followed an even bigger expansion in 2020, when it grew over 38% and added half a million employees.

Overall, Amazon reported 1.6 million employees as of the end of December 2021, of which about 300,000 have corporate jobs.

An Amazon executive said that its Covid-era expansion was one reason for cutbacks on Wednesday in a memo to employees.

“During Covid, our first priority was scaling to meet the needs of our customers while ensuring the safety of our employees. I’m incredibly proud of this team’s work during this period,” Amazon retail chief Doug Harrington said in a memo obtained by CNBC. “Although other companies might have balked at the short-term economics, we prioritized investing for customers and employees during these unprecedented times.”

Meta (formerly Facebook) has increased headcount by thousands of employees each year since going public in 2012, according to SEC filings.

In 2020, Meta added over 13,000 employees, a 30% increase, and the biggest year of hiring in the company’s history. In 2021, it added another 13,000 workers. By total worker numbers, it was the two biggest years of expansion in Facebook’s short history.

Alphabet, formerly Google, has not cut as many positions as other large-cap companies, but in recent weeks, it has cut 240 positions at Verily, its health sciences division, and laid off 40 at Intrinsic, a robotics division.

But while Alphabet’s recent cuts are much smaller than some other companies, its growth was similarly massive.

In 202, Alphabet added over 21,000 employees, or a 15% increase during the year to a total of 156,500 workers. In 2020, it added over 16,000 employees, or a nearly 14% increase.

That growth predates the pandemic, however, as Alphabet has increased headcount at least 10% every year since 2013, and added 20% new employees in 2018 and 2019 as well.

Apple grew much more slowly during the pandemic. In fact, Apple’s hiring over the past few years has followed the same general trend since 2016.

As of September 2022, Apple had 164,000 employees, which includes both corporate employees as well as retail staff for its stores. But that was only a rise of 6.5% from the same period in 2021, amounting to real growth of 10,000 employees. Apple also hired judiciously in 2020, adding less than 7,000 employees in the year before September 2021.

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Amazon gets FAA approval for new delivery drone as it begins tests in Arizona

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Amazon gets FAA approval for new delivery drone as it begins tests in Arizona

Amazon said Tuesday it received regulatory approval to begin flying a smaller, quieter version of its delivery drone, the latest step in its long-running efforts to get the futuristic program off the ground.

The company unveiled the new drone, called the MK30, in November 2022. It said then that the MK30, in addition to the other changes, would fly through light rain and have twice the range of earlier models.

Amazon said the Federal Aviation Administration’s approval includes permission to fly the MK30 over longer distances and beyond the visual line of sight of pilots. The agency granted a similar waiver for Amazon’s Prime Air program in May, though that was limited to flights in College Station, Texas, one of the cities where it has been conducting tests.

Alongside the FAA approval, Matt McCardle, head of regulatory affairs for Prime Air, said the company is starting to make drone deliveries Tuesday near Phoenix, Arizona. In April, Amazon said it planned to spin up drone operations in Tolleson, a city west of Phoenix, after it shut down an earlier test site in Lockeford, California. The company will dispatch the drones near one of its warehouses in Tolleson as it looks to integrate Prime Air more closely into its existing logistics network and further speed up deliveries.

An FAA spokesperson said the agency granted Amazon permission to conduct beyond visual line of sight deliveries in Tolleson on Oct. 31.

Amazon founder Jeff Bezos first unveiled plans for the ambitious service more than a decade ago, remarking at the time that the program could be up and running within five years. Despite Amazon investing billions of dollars into the program, progress has been slow. Prime Air encountered regulatory hurdles, missed deadlines and had layoffs last year, coinciding with widespread cost-cutting efforts by CEO Andy Jassy. The program also lost some key executives, including its primary liaison with the FAA and its founding leader. Amazon hired former Boeing executive David Carbon to run the operation.

It’s also encountered pushback from some residents in the cities where it’s trialing drone deliveries. Residents in College Station complained about the noise levels enough that it prompted the city’s mayor to mention the concerns in a letter to the FAA, CNBC previously reported. In response, Amazon executives told residents the company would identify a new drone delivery launch site by October 2025.

Amazon isn’t the only company trying to crack delivery by drone. It’s competing with Wing, owned by Google parent Alphabet, UPS, Walmart and a host of startups including Zipline and Matternet.

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Palantir shares jump 23% to record on uplifting guidance

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Palantir shares jump 23% to record on uplifting guidance

Palantir Technologies CEO Alex Karp appears on a Bloomberg television interview during the FoundryCon event in Palo Alto, California, on March 7, 2024.

David Paul Morris | Bloomberg | Getty Images

Palantir shares jumped 23% on Tuesday and headed for a record close after the data analytics software maker reported robust third-quarter results and issued uplifting revenue guidance.

The stock reached a high of $51.19, above the prior record of $45.14 reached last week. If the gain holds, it will mark the stock’s biggest jump since Feb. 6, when shares popped 30%.

Revenue climbed 30% to $726 million from a year earlier, topping the $701 million average analyst estimate, according to LSEG. Adjusted earnings per share of 10 cents beat the 9-cent average estimate.

Analysts at Deutsche Bank said in a report that “the beat was driven by better-than-anticipated US Government performance,” boosted by demand for artificial intelligence tools.

“Palantir is among a handful of infrastructure software companies that have started to meaningfully monetize generative AI, where its competitive positioning benefits from longtime investment and deep expertise in complex data integration, and particularly its reputation for data security built into its ontology,” the analysts wrote.

Net income of $143.5 million, or 6 cents per share, was up from $71.5 million, or 3 cents per share, in the same quarter a year ago. The company called for fourth-quarter revenue of $767 million to $771 million. Analysts surveyed by LSEG had been looking for $741.4 million.

Palantir is targeting more than $687 million in U.S. commercial revenue for the year, implying about 24% of the total.

Bank of America bumped its price target from $50 to $55 and maintained its buy rating.

“We continue to view the adoption of PLTR’s AI-enabled products and reach in its early days, as more companies realize the time, resource, and cost savings possible,” Bank of America analysts wrote in a note to investors. “In our view, Palantir’s moat as the differentiated agnostic AI-enabler is only growing with each new use-case carrying compounding unit economics.”

— CNBC’s Jordan Novet and Michael Bloom contributed to this report.

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OpenAI hires Meta’s former Orion head to lead its robotics efforts

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OpenAI hires Meta's former Orion head to lead its robotics efforts

Jaap Arriens | NurPhoto via Getty Images

The former head of Meta’s Orion augmented reality glasses initiative has joined OpenAI to lead the startup’s robotics and consumer hardware efforts.

Caitlin “CK” Kalinowski announced her new role Monday in a post on LinkedIn and X, writing, “In my new role, I will initially focus on OpenAI’s robotics work and partnerships to help bring AI into the physical world and unlock its benefits for humanity.”

OpenAI has gained popularity for its viral chatbot, ChatGPT, but the hiring underscores its apparent efforts to move into building and selling hardware. Former Apple exec Jony Ive, who helped design some of Apple’s most iconic products from the iMac to the iPhone, has also partnered with OpenAI to create an AI device.

The announcement came the same day as that of OpenAI’s investment into Physical Intelligence, a robot startup based in San Francisco, which raised $400 million at a $2.4 billion post-money valuation. Other investors included Amazon founder Jeff Bezos, Thrive Capital, Lux Capital and Bond Capital.

The startup focuses on “bringing general-purpose AI into the physical world,” per its website, and it aims to do this by developing large-scale artificial intelligence models and algorithms to power robots. 

Before the new role at OpenAI, Kalinowski was a hardware executive at Meta for nearly two and a half years leading the company’s creation of Orion, previously codenamed Project Nazare, which it billed as “the most advanced pair of AR glasses ever made.” Meta unveiled its prototype glasses in September.

Before leading the Orion project, Kalinowski worked for more than nine years on virtual reality headsets at Meta-owned Oculus, and before that, nearly six years at Apple helping to design MacBooks, including Pro and Air models.

Kalinowski’s first day on the job at OpenAI is Tuesday, Nov. 5, per a LinkedIn post.

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