When Alphabet (GOOG), Microsoft (MSFT), and Meta Platforms (META) all posted poor growth in the last quarter, their shares rallied. Markets bought into the hope that all three firms will reverse their negative growth and declining profits in the coming quarter.
None of these firms are growth plays at this time. Revenue will fall in the current quarter. Fortunately, these mega-cap companies are relatively the strongest. They have a fortress balance sheet. Moreover, they will pivot to growth.
Alphabet cut staff to increase margins. Its investment in Bard, an artificial intelligence response to Microsoft ChatGPT, has potential. For now, it may rake in high-margin profits from ad-supported searches.
Microsoft will add ChatGPT to some of its Office products. The company did not reveal the monthly cost to consumers. Any subscription sign-up will increase its margins.
Meta reframed steep cost cuts as its Year of Efficiency. It announced a second round of cost cuts. This will free up cash flow and increase margins.
Meta continues to commit to a pivot into the metaverse platform. Meta may fund this project with a Meta verified account subscription. If metaverse does not attract users, the company could cancel it, saving the firm billions in costs in the next decade.
