Mornings With Maria Bartiromo January 31, 2023

Monday's Musings: Q1 Earnings Benefit From The Great Big Tech Reset

Big Tech and Market Reset Bring Optimism To Markets

While many in the market are still psyching others into a recession, the fears are subsiding and the NASDAQ appears to be where the optimists are.  Five factors have led to the mini rebound in this market of lowered expectations as watchers await the fed rate decision.:

  1. Slowing growth warnings set expectations to the street
  2. Culling the herd is needed to meet financial projections
  3. Tech talent still in demand despite the headline job cuts
  4. Critical infrastructure in cybersecurity, cloud, analytics, automation, and AI outperform
  5. Digital giants still rule the world with new asset classes created.

These factors have led to the NASDAQ up almost 9% as of this post.

Slowing growth warnings.

Every CFO has decided to warn the street and reset expectations. Valuations have been cut since Fall of 2022.  Recently, Microsoft talked about slowing cloud growth, IBM shared insight into a slowing in services revenue.  SAP talked about shifts in spending to core and sustainability in Europe. Tesla forcasted lower numbers than 50% growth and put in a price cut.

Culling the herd. 

The tech market has had over 1400 rounds of layoffs with 220,000 jobs cut in 2022. As of 2023, over 57,000 job positions have been cut to date.  After minimal job cuts amidst a labor shortage, tech companies failed to cut their bottom 5% since 2019.  The companies have often hired lower quality talent at higher wages. Leaders are taking this time to rebalance their workforce and reduce low performers.  If one's keeping score, Microsoft cut 10,000, IBM cut 3900, SAP cut 2800, Amazon Cut 18,00, Meta announced 11,000.

Despite these cuts, there remains a huge demand for tech talent.  Consulting and services drove IBM's growth in the past quarter.  Most IT services vendors can not hire enough new talent and still face massive attrition in the 20 to 30 percent range. Many workers who have been let go have been able to find a new position in less than 60 to 90 days.

Critical infrastructure outperforms.

From Constellation's Q4 2022 Business Confidence Survey, digital leaders continue to increase investments in analytics, automation, AI, and cloud.  Few folks are reducing investment in cyber security.  ServiceNow's performance in the latest quarter showed how these factors come together for outperformance. In fact, SevrviceNow outperformed the Rule of 40 and achieved the Rule of 58%.  CEO Bill McDermott also vowed not to fire anyone in 2023.

Digital giants still rule the world.

The MATANA class of stocks (Microsoft, Apple, Tesla, Alphabet, Nvidia, Amazon) and other digital giants are still doing well due to strong fundamentals.  These enterprise win because they:

  • have large networks
  • disintermediate markets
  • compete on data
  • apply multiple digital monetization models
  • operate with a long term mind set

The Bottom Line: Watch For An Emerging Asset Class In Data Driven Digital Networks

A new asset class will emerge from data driven digital networks or the DDDN's as featured in Everybody Wants To Rule The World. These networks of 100s of millions and even billions of connected people, devices, and their data will create a new asset class exponentially bigger than existing big tech categories.  The signals on pricing, supplier availability, demand, consumer preferences, regulatory impact, and risk will create new business models in every industry.  The organizations can bring the content, distribution network, technology platform, and multi-sided markets will dominate the next decade and beyond.

Your POV

Where will you put your money in 2023? Do you see big tech and digital giants coming back? How do you see the Q1 earnings season playing out for the economy?

Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) org. Please let us know if you need help with your strategy efforts. Here’s how we can assist:

  • Developing your metaverse and digital business strategy
  • Connecting with other pioneers
  • Sharing best practices
  • Vendor selection
  • Implementation partner selection
  • Providing contract negotiations and software licensing support
  • Demystifying software licensing

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact Sales.


Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy,stay tuned for the full client list on the Constellation Research website. * Not responsible for any factual errors or omissions.  However, happy to correct any errors upon email receipt.

Constellation Research recommends that readers consult a stock professional for their investment guidance. Investors should understand the potential conflicts of interest analysts might face. Constellation does not underwrite or own the securities of the companies the analysts cover. Analysts themselves sometimes own stocks in the companies they cover—either directly or indirectly, such as through employee stock-purchase pools in which they and their colleagues participate. As a general matter, investors should not rely solely on an analyst’s recommendation when deciding whether to buy, hold, or sell a stock. Instead, they should also do their own research—such as reading the prospectus for new companies or for public companies, the quarterly and annual reports filed with the SEC—to confirm whether a particular investment is appropriate for them in light of their individual financial circumstances.

Copyright © 2001 – 2023 R Wang and Insider Associates, LLC All rights reserved.

Contact the Sales team to purchase this report on a a la carte basis or join the Constellation Executive Network