Shares of Meta and Amazon soared on Friday after the companies reported quarterly results and outlooks that far exceeded Wall Street expectations, confirming the effectiveness of the technology industry's spending cuts over the past 16 months. Amid the craze about artificial intelligence and its potential to boost profits, Meta and Amazon stand out among tech giants this earnings season for one simple reason: Both companies have laid off tens of thousands of people and their core businesses performed well during the holidays.
This allowed Meta to announce plans for an additional $50 billion in share buybacks and its first quarterly dividend, giving investors a reason to continue holding the stock.
The combined stock market value of the two companies increased by $336 billion. Amazon rose 7.9% and Meta shares soared 20% to a record high of $474.99. Meta's gains added $197 billion to its market capitalization, the largest ever for the stock market.
Amazon's online sales are seeing their strongest growth since the early days of the pandemic, thanks to shorter shipping times. The company launched its largest-ever layoffs starting in 2022, with about 35,000 people affected last year. Amazon said it will cut more jobs in its Prime Video, Twitch live broadcast and other businesses.
Note: Meta’s market capitalization growth in this chart is updated to pre-market on February 2, Eastern Time
"This newfound cost control is paying off for investors, as companies are able to cut less productive operations and still be able to invest some of the savings in faster-growing businesses," DA Davidson & Co. Managing director Gil Luria said, "At the same time, these companies have achieved accelerated revenue growth and thus significantly improved profit margins."