Motion Sickness Is Tech Slowdown A Post-Pandemic Reset Or A Sign Of Real Trouble?

This year’s great slowdown in the tech sector is continuing unabated, with analysts warning that US economic headwinds including rising inflation and recession fears mean worse news is on the way.

- Kari Paul

Under the shadow of a looming round of potential redundancies in Silicon Valley, the next fortnight’s earnings reports from Facebook owner Meta, Twitter, Tesla and Google are expected to make for tricky reading for investors.

“The biggest question now is, how bad is it?” said Scott Kessler, a technology industry analyst at the global research firm Third Bridge. There area lot of variables to consider, and some areas seem to be holding up while others are getting hit pretty hard.”

After pandemic lockdowns turbocharged the sector, providing a captive audience for online services that drove consecutive quarters of growth, fortunes have reversed this year. Analysts are bracing to see if the last disappointing round of results represents the end of Silicon Valley’s golden era or simply a slowdown after the last few years of rapid expansion.

Earnings across industries are forecast to slow, with researchers at Factset expecting a growth rate of 2.4% in the wider S&P Index the lowest figure since the third quarter of 2020. As inflation has risen around the world throughout 2022, advertising spending is down across online platforms, although some companies are being hit harder than others.