Wall Street is aware that the Big Tech boom is over.

Meta and the others are still present, but they are now big, boring corporations. That might not be a bad thing after all.

I won’t discuss Elon Musk or Twitter in this article.

Okay, just a little: Elon and Twitter are currently making front-page news, but they are not the most significant development in the IT industry.

The story that matters most for technology and business is this one: The large consumer corporations that have fueled the tech industry for years aren’t going away, but it appears like their days of rocket-ship growth are winding down. Wall Street investors who wanted to ride along are now disembarking, so those businesses and their people must learn to make do with less.

We have been watching this unfold as tech stocks have fallen for the most of the year, but it really came into focus this week when Alphabet, Meta, and Amazon all saw their shares crash, resulting in a $400 billion value loss for the sector as a whole.

Investors should be concerned about each of the tech companies for different reasons, but I’d contend that they all share the same fundamental issue: none of them appear to have any new, enormous businesses in the works, and they are all mature businesses that will no longer dazzle Wall Street with explosive growth from their core businesses. For instance, Alphabet just reported revenue growth of 6%, which was the lowest quarterly increase in a decade.

Investors should be concerned about each of the tech companies for different reasons, but I’d contend that each of them shares the same fundamental issue: none of them appear to be developing any new, enormous businesses that will wow Wall Street in the near future. This is because each of them is a mature company that can no longer wow Wall Street with astronomical growth from its core businesses. For instance, Alphabet recently reported sales growth of just 6%, which was the company’s poorest quarter in ten years.

Maybe! These items are, however, highly pricey and speculative, and in the meantime, all of the corporations concerned are concentrating on generating more sales and profits from their current operations. This is increasingly concentrated on Apple and Amazon converting their digital properties into ad businesses. At Meta, there is an effort to replicate the success of TikTok with its outdated Facebook and Instagram features. It’s also an effort to spotlight YouTube, which is already close to two decades old, at Alphabet, where 60 percent of revenue still derives from the same search ad company it founded 22 years ago.

These issues are not at all new. For 15 years, people have been wondering when Apple would produce another device of the same caliber as the iPhone (answer: never).

But for many years, especially after the Great Recession of 2008, when the US government dropped lending rates to zero or almost zero and left them there until recently, they were simple to ignore. It’s no coincidence that this was also the time when tech stocks began to decline. If capital is virtually free, investors will seek out more speculative wagers, which will raise the value of the businesses they are wagering on, persuade additional investors to do the same, and so on.

Now that everyone has calmed down, fancy ideas like cryptocurrency are off the table. And the reason why extremely lucrative and large-scale tech companies aren’t disappearing even while their valuations are decreasing. The ratio between the stock price and the value of a company’s earnings can be used as an approximate indicator of investor fervor. For instance, Meta’s price-earnings ratio is at 9.434, down from 32.75 at the end of 2020. In the same period, Alphabet decreased from 34.32 to 19.14. (Amazon, though, ultimately remained unchanged, despite its recent decline.)

And I’d contend that there are further indicators that point to these once-dynamic enterprises having reached a brick wall. As an illustration, almost all of the individuals who founded and led the major computer companies have delegated leadership to experienced managers. To do other things is more enjoyable.

I don’t do optimism, but if we choose, we can certainly see this as a glass half-full: Yes, Facebook has announced that it will maintain a flat headcount for at least the next 15 months despite having hired more than 19,000 individuals in the past year, a 28 percent rise. This is accomplished through a mixture of very little hiring, failing to replace workers who quit on their own, and shoving others out the door.

But theoretically, every applicant for a job at Facebook who is rejected there may wind up… somewhere more fascinating. Beyond the Web3 mania of recent years, one of the driving concepts was that the major IT players had grown to such size and dominance that it was now difficult to create anything new without their consent. They are still huge and powerful today, but perhaps not as alluring to those who wish to create something fresh. That isn’t a horrible concept.


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