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Layoff announcements are once again hitting the tape today. News of Google layoffs at Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) cloud division is spurring additional conversation around the health of the jobs market, with particular emphasis on higher-paying jobs in the tech sector.
According to a report from Business Insider, which cited an unnamed employee familiar with the matter, “sweeping job cuts” are unfolding at the company, with the most-affected division reportedly Google Cloud’s “Go To Market” teams.
At this point in time, it’s unclear how many employees will be affected by this move. But let’s dive into what we’ve learned — and what it may mean for employees and GOOG stock investors moving forward.
Google Layoffs: The Latest Headline to Suggest the Job Market Is Weakening
I’m seeing very few headlines these days around companies concerned about being understaffed and rushing to hire. In fact, it’s very much the opposite, with many tech giants in particular appearing more concerned about over-hiring after the pandemic-driven surge in revenue and profitability.
The Federal Reserve has done its job of tamping down demand from individuals and companies, with higher interest rates making the cost of everything rise. Unfortunately, though, this effect is having negative ramifications for many higher-income employees who have made it onto the chopping block.
I expect that we’ll hear some more details about this recent move via a press release, or at the very least in the company’s upcoming earnings call. But it’s becoming increasingly clear that companies like Alphabet are searching for efficiencies wherever they can be found. For many employees on work visas, that’s certainly not a great thing and it’s important to recognize the human element of these layoffs as well.
Today, GOOG stock is little-changed on the news. Given the size of the company, my hope is that laid-off employees will be able to find their way into another growth segment of the company that’s still hiring. For investors, however, I don’t think the Google layoffs news changes the thesis one way or the other. Rather, it’s just a telling reminder of the Fed-induced environment we’re in right now.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.