Will the economic slowdown take the wind out of the US tech industry’s sails?

theguardian.com:

Amid an ongoing slowdown in the tech industry, with potential layoffs looming, investors are expecting another rough season of earnings reports from the sector.

The next two weeks will see earnings calls from Meta, Twitter, Tesla, Google and others – and analysts are warning of more slowdowns, as economic headwinds including rising inflation and fears of recession continue.

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

Experts say not much has changed since the last round of earnings brought mixed results for companies in the space including Meta, Netflix and Amazon. The backslide on earnings comes after the pandemic brought consecutive quarters of growth for the space, with lockdowns forcing much of the world inside and online.

Analysts are bracing to see if the disappointing results this year represent a halt of Silicon Valley’s golden era or simply an expected slowdown of its explosive growth over the last few years.

Earnings across industries are forecast to slow, with researchers at Factset anticipating 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 throughout 2022, advertising spending is down across online platforms. Advertising revenue often falters amidst larger economic downturns, experts say, but some companies are being hit harder than others.

In its second quarter earnings report, Meta provided a third quarter guidance that fell below industry estimates, stating it anticipated revenue for the time period to be in the range of