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During 2023, tech companies laid off 262,592 employees, which is 69% more than in 2022. This year seems to be following that trend. Updated on January 4th, the New York Fed still forecasts recession probability at 63%, based on treasury spread. 

Moreover, it remains to be seen what impact will the expected rate cuts, starting from May, have on the economy in that scenario. So far, tech companies have laid off 23,700 staff. Although this is 73% less than in January 2023, major tech layoffs are ongoing.

Main Reasons for Layoffs

AI integration will play a significant role in downsizing. According to a Bridgepoint Consulting poll that surveyed over 100 industry-leading CFOs, 33% of respondents view AI investment as necessary to optimize and cut personnel costs during 2024. 

This aligns with a December poll from Resume Builder, in which 38% of companies are likely to continue layoffs in 2024, with 52% to place a hiring freeze for the year. Large companies with over 1,000 employees are less likely to downsize, at 39%, vs midsize companies at 42%.

Cost reduction is typically the main reason for layoffs (69%), followed by recession concern (51%), profit-boosting (42%), and AI integration (39%).With this trend in mind, which publicly traded companies will get leaner in 2024?

Salesforce, Inc. (Nasdaq: CRM)

Heading into 2024, Salesforce announced to cut 1% of its global staff, amounting to around 700 employees. In 2023, the cloud-based Customer Relationship Management (CRM) platform cut 10% of its workforce, just over 7,000 employees. 

Given its Software-as-a-Service (SaaS) business model, Salesforce receives recurring income from subscriptions. With AI in play, Salesforce has ample space to scale up further. The company deployed Salesforce Einstein, its main tool, to process natural language and provide predictive analytics for businesses. 

In November, Salesforce delivered strong Q3 FY24 results, having grown its revenue by 11% year-over-year to $8.72 billion. The company was generous with stock buybacks during the quarter, resulting in a $1.9 billion return to shareholders. For FY24, Salesforce raised operating cash flow guidance to 30% – 33% YoY and operating margin to 14.5%.

For comparison, Salesforce had an operating margin of 3.3% for FY23, while its operating cash flow was up 19% YoY. This showcases the company’s steady rise in cost-effectiveness in spending money to generate each revenue dollar.

Over the last three months, CRM stock has increased 44%. Based on 42 analyst inputs pulled by Nasdaq, CRM stock is a “strong buy. ” The average CRM price target is $285.14, compared to the current $282. The high estimate is $350, while the low forecast is $212 per share.

Intel Corporation (Nasdaq: INTC)

This semiconductor multinational had five rounds of layoffs during 2023, with 343 employees let go. This was part of a broader initiative to cut costs by up to $10 billion by the end of 2025, so more personnel cuts are expected. 

At the end of December, Intel delivered its FY 2023 earnings, having increased YoY revenue by 10$ to $15.4 billion for Q4. Although this surpassed estimates, Intel’s full-year revenue decreased 14% YoY. Likewise, Intel’s net income went down 79% compared to 2022.

Across Intel’s divisions, only Mobileye and Intel Foundry Services went up, at 11% and 103% respectively. However, with continued investments in new technologies and AI, INTC will likely rally from this economic cycle.

Over the last three months, INTC stock has increased 35%. Based on 35 analyst inputs pulled by Nasdaq, INTC stock is a “buy. ” The average INTC price target is $45.78 vs. the current $44. The high estimate is $68, while the low forecast is $17.

Alphabet, Inc. (Nasdaq: GOOGL)

Since January 2023, Google has laid off 12,000 employees, translating to 6% of the global workforce. When it became apparent that Twitter could function equally well with an 80% workforce cut, investors took note. Alphabet investor TCI was the first to urge job cuts alongside cuts to “excessive employee compensation.”

Heading into 2024, the company laid off staff from the Moonshot X lab division, deciding to outsource it instead. This division was tasked with technological breakthroughs while “embracing failure as a part of the innovation process. “

This was on top of cutting thousands of employees on January 11th. On January 30th, Alphabet is scheduled to deliver its Q4 2023 earnings. In Q3, the company achieved 11% YoY revenue growth, with operating margin rising from 25% to 28%. From a year-ago quarter, Alphabet’s net income increased by 41% to $19.7 billion.

GOOGL stock has increased 24% over the last three months. Based on 40 analyst inputs pulled by Nasdaq, GOOGL stock is a “strong buy. ” The average price target is $159 vs. the current $152. The high estimate is $180, while the low forecast is $140 per share.

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