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Tech’s longtime highfliers are growing up by getting smaller

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Visitors take photos in front of the Meta sign at its headquarters in Menlo Park, California, December 29, 2022.

Tayfun Coskun | Anadolu Agency | Getty Images

Technology companies are learning an old lesson from Wall Street: maturing means shrinking.

Meta and Amazon saw their shares spike on Friday following their fourth-quarter earnings reports. While revenue for both topped estimates, the story for investors is that they’re showing their ability to do more with less, an alluring equation for shareholders.

There’s also a recognition that investors value cash, in many cases, above all else. The tech industry has long preferred to reinvest excess cash back into growth, ramping up hiring and experimenting with the next big thing. But following a year of hefty layoffs and capital preservation, Meta on Thursday announced that, for the first time, it will pay a quarterly dividend of 50 cents per share, while also authorizing an additional $50 billion stock repurchase plan.

“The key with these companies is really that they’re able to reinvent themselves,” said Daniel Flax, an analyst at Neuberger Berman, in an interview with CNBC’s “Squawk Box” on Friday. They “continue to invest for the future and play offense while at the same time manage expenses in this tough environment,” he said.

Amazon is less aggressively moving to send cash to shareholders, but the topic is certainly being discussed. The company instituted a $10 billion buyback program in 2022 and hasn’t announced anything since. On Thursday’s earnings call, Morgan Stanley analyst Brian Nowak asked about plans for additional capital returns.

“Just really excited to actually have that question,” finance chief Brian Olsavsky said in response. “No one has asked me that in three years.”

Olsavsky added that “we do debate and discuss capital structure policies annually or more often,” but said the company doesn’t have anything to announce. “We’re glad to have the better liquidity at the end of 2023 and we’re going to try to continue to build that,” he said.

After years of seemingly unfettered growth, the biggest internet companies in the world are firmly into a new era. They’re still out hunting for the best technical talent, particularly in areas like artificial intelligence, but headcount growth is measured. Staffing up in certain parts of the business likely means scaling back elsewhere.

‘Playing to win’

For example, Meta CEO Mark Zuckerberg told investors that when it comes to AI, “We’re playing to win here and I expect us to continue investing aggressively in this area in order to build the most advanced clusters.”

Later on the call, when asked about expanding headcount, Zuckerberg said new hiring will be “relatively minimal compared to what we would have done historically,” adding that, “I kind of want to keep things lean.”

Olsavsky said most teams at Amazon are “looking to hold the line on headcount, perhaps go down as we can drive efficiencies in the size of our business.”

The story is playing out across Silicon Valley. January was the busiest month for tech job cuts since March, according to the website Layoffs.fyi, with almost 31,000 layoffs at 118 companies. Amazon and Alphabet added to their 2023 job cuts with more layoffs last month, as did Microsoft, which eliminated 1,900 roles in its gaming unit shortly after closing the acquisition of Activision Blizzard.

SAN FRANCISCO, CALIFORNIA – JUNE 23: XBOX CEO Phil Spencer arrives at federal court on June 23, 2023 in San Francisco, California. Top executives from Microsoft and Activision/Blizzard will be testifying during a five day hearing against the FTC to determine the fate of a $68.7B merger of the two companies. (Photo by Justin Sullivan/Getty Images)

Justin Sullivan | Getty Images News | Getty Images

Downsizing this week hit the cloud software market, where Okta announced it was cutting about 400 jobs, or 7% of its staff, and Zoom confirmed it was eliminating less than 2% of its workforce, amounting to close to 150 positions. Zuora announced a plan to cut 8% of jobs, or almost 125 positions based on the most recent headcount figures.

Evan Sohn, chairman of Recruiter.com, called it a “very confusing job market.” Last year, tech companies were responding to dramatically changing market conditions — soaring inflation, rising interest rates, rotation out of risk — after an extended bull market. Meta slashed over 20,000 jobs in 2023, Amazon laid off more than 27,000 people, And Alphabet cut over 12,000 positions.

The economy is in a very different place today. Growth is back at a healthy clip, inflation appears under control and the Federal Reserve is indicating rate cuts are on the horizon this year. Unemployment held at 3.7% in January, down from 6.4% three years earlier, when the economy was just opening up from pandemic lockdowns. And nonfarm payrolls expanded by 353,000 last month, the Labor Department’s Bureau of Labor Statistics reported Friday.

Tech stocks are booming, with Meta, Alphabet and Microsoft all at or near record levels.

But the downsizing in the industry continues.

“Companies are still in the cleanup from ’23,” Sohn told CNBC’s “Worldwide Exchange” this week. “There could be a flipping of skills, different skills necessary to really handle the new world of 2024.”

Recent layoffs are fueled by changing skills and push for AI, says Recruiter.com's Evan Sohn

Wall Street is rewarding tech companies for improved discipline and cash distribution, but it raises the question about where they can turn for significant growth. Other than Nvidia, which had a banner 2023 due to soaring demand for its AI chips, none of the other mega-cap tech companies have been growing at their historic averages.

Even Meta’s better-than-expected 25% growth for the fourth quarter is a bit misleading, because the comparable number a year ago was depressed due to a slowing digital advertising market and Apple’s iOS update, which made it harder to target ads. Finance chief Susan Li reminded analysts on Thursday that as 2024 progresses, the company will be “lapping periods of increasingly strong demand.”

By late this year, analysts are projecting growth at Meta will be back down to the low teens at best. Growth estimates for Amazon and Alphabet are even lower, a good indication that calls for capital allocation measures may only get louder.

Ben Barringer, technology analyst at Quilter Cheviot, told CNBC that Meta’s decision to pay a dividend was a “symbolic moment” in that regard.

“Mark Zuckerberg is showing that he wants to bring shareholders along with him and is highlighting that Meta is now a mature, grown-up business,” Barringer said.

— CNBC’s Annie Palmer contributed to this report

WATCH: Meta’s Q4 report suggests it’s putting Nvidia’s chips to great use

Here's why Rosenblatt raised its price target on Meta

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February 2, 2024

Amazon is worth more than Alphabet for the first time in 16 months

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Earnings season is causing a reshuffling among the ranks of the largest U.S. companies.

Amazon.com Inc.
AMZN,
+7.87%
overtook Alphabet Inc.
GOOG,
+0.58%

GOOGL,
+0.86%
and become the third-largest U.S. public company upon Friday’s close, after its results were well received by Wall Street and Alphabet’s earlier in the week got panned.

Amazon edged out Alphabet only barely, with a closing market cap of $1.785 trillion compared with $1.777 trillion for Alphabet, according to Dow Jones Market Data.

Read: Amazon says the ‘magic words.’ They could spur a $110 billion market-cap boost.

The e-commerce giant hadn’t been valued above the Google parent company since Sept. 30, 2022, according to Dow Jones Market Data. That was also the last time Amazon was the third-largest by market cap.

Wall Street found plenty to like in Amazon’s latest report, including drastic improvement in operating income, upbeat commentary on the cloud and momentum within the retail business. Meanwhile, Alphabet’s earnings were met with a chillier reception as the company talked up heavy spending plans linked to its artificial-intelligence ambitions.

The very top of the market-cap ranks has changed up as well lately, though admittedly with less of a tie to earnings. Microsoft Corp.’s
MSFT,
+1.84%
closing valuation surpassed Apple Inc.’s
AAPL,
-0.54%
on Jan. 12 for the first time since November 2021. While the two traded around the top spot in January, Microsoft has been sitting there since Jan. 25.

Don’t miss: Microsoft earnings may have offered a big bullish clue about cloud growth

Microsoft also rests alone in the $3 trillion club, with Apple, the only other U.S. company to ever claim membership, having fallen out of it.

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February 2, 2024

Stocks making the biggest moves after hours: Meta, Amazon, Apple, Skechers and more

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February 1, 2024

Meta shares jump more than 10% after profit triples and company announces first-ever dividend

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Mark Zuckerberg, CEO, Meta Platforms, in July 2021.

Kevin Dietsch | Getty Images News | Getty Images

Meta beat on earnings and revenue in its fourth-quarter report on Thursday and announced its first-ever dividend payment. The stock jumped more than 10% in extended trading.

Earnings: $5.33 per share. That may not compare with the $4.96 per share expected by LSEG, formerly known as Refinitiv.
Revenue: $40.1 billion. That may not compare with the $39.18 billion expected by LSEG

Wall Street will also be looking at these key user numbers:

Daily active users (DAUs): $2.11 billion vs. 2.08 billion expected, according to StreetAccount
Monthly active users (MAUs): $3.07 billion vs. 3.06 billion expected, according to StreetAccount
Average revenue per user (ARPU): $13.12 vs. $12.81 expected, according to StreetAccount

Meta said it has declared its first dividend, which is pegged at 50 cents. The company also announced a $50 billion share buyback.

Revenue jumped 25% in the quarter from $32.2 billion a year earlier, the fastest rate of growth for any period since mid-2021. Meanwhile, the company’s cost and expenses decreased 8% year-over-year to $23.73 billion.

The company’s operating margin more than doubled from a year earlier to 41%, a clear sign that the company’s cost-cutting measures are bolstering profitability.

Net income more than tripled to $14 billion, or $5.33 per share, from $4.65 billion, or $1.76 per share, a year earlier.

The company said that sales in its Reality Labs unit passed $1 billion in the first quarter, and recorded $4.65 billion in losses.

“We had a good quarter as our community and business continue to grow,” Meta CEO Mark Zuckerberg said in a statement. “We’ve made a lot of progress on our vision for advancing AI and the metaverse.”

Meta said it expects first-quarter sales to be in the range of $34.5 billion to $37 billion. The company said that its expects its 2024 expenses to be in the range of of $94 billion to $99 billion.

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February 1, 2024

Wall Street punishes Alphabet and Microsoft despite earnings beats after stocks hit record

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Google CEO Sundar Pichai speaks at a panel at the CEO Summit of the Americas hosted by the U.S. Chamber of Commerce in Los Angeles on June 9, 2022.

Anna Moneymaker | Getty Images

Results were good, but not good enough.

That’s Wall Street’s reaction to quarterly results on Tuesday from Alphabet and Microsoft. Both companies reported revenue and earnings that exceeded estimates, yet the stocks sold off after hours, a drop that carried over into Wednesday’s trading session.

In investor speak, the stocks were priced for perfection. Prior to earnings, Alphabet was up 56% for the year and climbed to a fresh high last week, exceeding the prior record from late 2021, the peak of the tech boom. Microsoft was up 70% over the past 12 months, also reaching a fresh high recently and surpassing Apple as the most valuable publicly traded company.

The companies generated excitement last year by riding the artificial intelligence wave, and were also lauded by shareholders for their dramatic cost-cutting efforts, which included eliminating thousands of jobs.

In the weeks heading into their earnings reports, investors were buying as if they expected positive surprises. They were left disappointed and nitpicked the numbers.

Alphabet on Tuesday reported 13% revenue growth, the fastest rate of expansion since early 2022. Sales of $86.31 billion topped the average estimate of $85.33 billion, according to LSEG, formerly known as Refinitiv. Earnings per share of $1.64 beat estimates by 5 cents.

Revenue at Microsoft increased 18% to $62.02 billion, topping the $61.12 billion average analyst estimate. EPS of $2.93 was 15 cents above consensus.

Both companies also beat expectations in their cloud businesses, with Google Cloud reporting 25% growth and Microsoft’s larger Azure and other cloud services expanding 30%.

The one disappointment from Alphabet was in Google’s ad business, which delivered revenue of $65.52 billion, trailing analysts’ estimates of $65.94 billion, according to StreetAccount. Within ads, YouTube came in just shy of expectations.

Stifel analysts, who recommend buying the stock, said in a quick-take report on Tuesday that Alphabet produced “healthy advertising results, but not enough.”

Brian Wieser, an analyst at media and advertising consultancy Madison and Wall, said the market has unrealistic expectations for Google given its size and dominance.

“In my general conversations with public market investors and sell-side analysts, few have a correct view of the advertising market,” Wieser said. “Many think that growth can continue at double-digit levels for the fastest-growing companies for much longer a period of time than is realistic to expect.”

Is the bubble bursting for tech workers?

Alphabet shares dropped more than 6% Wednesday. Microsoft’s decline was less severe, with the stock falling less than 2%.

Microsoft’s outlook was a bit light, overshadowing the earnings and revenue beat. The company called for fiscal third-quarter sales between $60 billion and $61 billion, while analysts polled by LSEG had expected $60.93 billion.

Shares of chipmaker AMD also dropped despite better-than-expected revenue numbers and profit that met estimates. The stock, which is up 137% in the past year on excitement about its artificial intelligence processors, fell almost 6% after the announcement.

Attention now turns to Thursday, when Amazon, Apple and Meta all report quarterly results. Similar to Alphabet and Microsoft, Meta shares have climbed to a record this month. Apple hit its all-time high in December, while Amazon remains about 6% below its record from 2022.

— CNBC’s Jonathan Vanian, Jordan Novet and Kif Leswing contributed to this report.

WATCH: This was a ‘high expectation’ quarter for Alphabet

This was a 'high expectation' quarter for Alphabet, says Evercore ISI's Mark Mahaney

Don’t miss these stories from CNBC PRO:

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January 31, 2024

These 6 stocks will be non-AI winners of an AI boom, says Scotiabank

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January 28, 2024

Klarna to debut $7.99 monthly plan as buy now, pay later firm seeks new revenue sources ahead of IPO

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Swedish buy now, pay later firm Klarna unveils a $7.99 monthly subscription plan called Klarna Plus

Courtesy: Klarna

Swedish fintech firm Klarna is launching a monthly subscription plan in the U.S. to lock in its heaviest users ahead of an expected initial public offering this year, the company told CNBC.

The product is set to be announced later Wednesday and will cost $7.99 per month, the Stockholm-based company said.

Users of the subscription plan, named Klarna Plus, will get service fees waived, earn double rewards points and have access to curated discounts from partners including Nike and Instacart, according to Chief Marketing Officer David Sandstrom.

Buy now, pay later services such as Klarna and Affirm have surged in popularity in recent years as more Americans rely on a new, fintech-enabled form of credit. The services typically break up a purchase into four payments.

When Klarna users shop outside the firm’s network of 500,000 retailers — at places such as Walmart, Target, Amazon and Costco — they pay $1 to $2 in transaction fees.

“The main proposition of Klarna Plus right now is that you don’t pay any service fees,” Sandstrom said. “So if you love Klarna and if you love shopping at Target and Walmart, it makes a ton of sense financially.”

Klarna’s IPO year

Klarna’s monthly plan is the latest example of a fintech player building out its offerings to boost recurring revenue. Wall Street investors tend to favor subscription revenue because of its predictability versus one-time transactions. Rival Affirm has explored its own subscription plan, though it hasn’t released one yet.

The approach is especially timely as Klarna nears an IPO that could value it at more than $15 billion, Sky News reported in November. Klarna CEO Sebastian Siemiatkowski told Bloomberg this week that a listing in the U.S., the firm’s largest market, was probably imminent.

Achieving that valuation would be a redemption of sorts for Klarna. The company was Europe’s most valuable startup before a collapse made it the poster child for so-called “down rounds” of funding. Klarna’s valuation sank 85% to $6.7 billion in 2022 as rising interest rates reined in high-flying fintech firms.

Savings sweetener

Klarna Plus could help persuade investors that the company can grow beyond its core product. The subscription, which was piloted in Utah for six months last year, is a “no brainer” for about 15% of the firm’s heaviest users, Sandstrom said. The company said it has about 37 million American customers.

“The thing we need to prove to ourselves and to the market is that we can add a new kind of revenue stream to Klarna,” Sandstrom said. “That’s something that a lot of companies have struggled to do.”

Up next for the U.S. is a high-yield savings account, Sandstrom said. Klarna Plus customers would probably earn a higher interest rate on savings than nonusers, he added.

“If you look at our business from the outside, it looks very much like ‘buy now, pay later,’” Sandstrom said. But “a world of opportunity opens up with someone you’ve helped in a financial relationship. You get to say, ‘Hey, wouldn’t it make sense to get the Klarna card?’”

Correction: This story has been updated to correct that Klarna’s subscription plan, Klarna Plus, was piloted in Utah after the company corrected information it had earlier provided.

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January 24, 2024

EBay to eliminate about 1,000 jobs, or 9% of full-time workforce

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eBay’s headquarters in San Jose, California, U.S.

Bloomberg | Getty Images

EBay said Tuesday that it plans to lay off 9% of the company’s workforce, equal to about 1,000 full-time jobs, as the tech industry continues to downsize to start 2024. The stock rose more than 3% in extended trading.

Jamie Iannone, eBay’s CEO, told employees in a letter published on a corporate blog, that the company will also “scale back the number of contracts we have within our alternate workforce over the coming months.”

Iannone said the job cuts are necessary because eBay’s “overall headcount and expenses have outpaced the growth of our business.”

“To address this, we’re implementing organizational changes that align and consolidate certain teams to improve the end-to-end experience, and better meet the needs of our customers around the world,” Iannone said. “Shortly, we will begin notifying those employees whose roles have been eliminated and entering into a consultation process in areas where required.”

Following hefty job cuts last year, tech companies have continued to eliminate positions in January as concerns about consumer and business spending persist. Amazon, Alphabet and Unity have confirmed cuts this month, and SAP said on Tuesday that it aims to carry out voluntary buyouts or enable job changes for 8,000 employees as part of a restructuring program for 2024.

Regarding eBay’s cuts, Iannone said he wants employees to work from home on Jan. 24, “to provide some space and privacy for these conversations.”

“These changes are difficult, but I’m confident that by working together we will become stronger than ever,” Iannone said. “In the months ahead, you will see a more focused, agile, and responsive eBay — one that is better positioned to advance our purpose of creating economic opportunity for all.”

EBay shares dropped about 4% in November after the company provided fourth-quarter revenue guidance that trailed Wall Street estimates. During a call with analysts, Iannone said that eBay had “observed softening consumer trends to date in Q4, and particular challenges in Europe, suggesting we may see a more muted seasonal uptick over the holidays.”

He added that “Inflationary pressures and rising interest rates continue to weigh on consumer confidence and pressured demand for discretionary goods.”

Earlier in January, eBay said it would pay a $3 million criminal penalty as part of a settlement related to a cyberstalking and harassment campaign conducted by a group by former employees.

WATCH: Jim Cramer on eBay

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January 23, 2024

As the S&P 500 enters bull market territory, here's what to consider before you invest

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People walk through the Financial District by the New York Stock Exchange (NYSE) on the last day of trading for the year on December 29, 2023 in New York City.

Spencer Platt | Getty Images

The S&P 500 stock index climbed to a new all-time high on Monday.

A bull market — by two definitions — is here. Last year, the S&P 500 rose more than 20% from its most recent low. As of Friday, it crossed another bull market threshold when it surpassed its previous high.

For investors who want to get in on the action, the good news investing in a fund that tracks the S&P 500 index is an easily accessible strategy.

But experts say it also deserves a word of caution: Past performance is not indicative of future returns. And while the S&P 500 was a clear winner in 2023 — finishing the year up 26% — it may not be the strategy that comes out ahead at the close of 2024.

What is the S&P 500 index?

The S&P 500 includes around 500 large cap equity stocks. The index is a market-cap weighted index, which means each company’s weighting is based on its market capitalization, or the total value of all outstanding shares.

The top companies by weight include Apple, Microsoft, Amazon, Nvidia, Alphabet (with two share classes), Meta, Tesla, Berkshire Hathaway and JPMorgan Chase.

Information technology represents the largest sector, with 28.9% of the index. A recent rally of big tech names has helped push the index to its recent highs.

How can you invest in the S&P 500?

Today, investors may choose from mutual funds or exchange-traded funds that track the index. Among the biggest ETFs are: SPDR S&P 500 ETF Trust, iShares Core S&P 500 ETF, and Vanguard S&P 500 ETF.

Vanguard in 1975 created the first index mutual fund that tracked the S&P 500. Vanguard founder John Bogle was famously a proponent of investing in a broad index fund.

“Simply buy a Standard & Poor’s 500 Index fund or a total stock market index fund,” Bogle wrote in his book, “The Little Book of Common Sense Investing.”

“Then, once you have bought your stocks, get out of the casino — and stay out,” he wrote. “Just hold the market portfolio forever.”

For stock investors who want to keep their strategies simple, experts say the approach can work.

“Among the better decisions people can make is starting with an index-based fund tracking the S&P 500 because it works,” Todd Rosenbluth, head of research at VettaFi, recently told CNBC.com.

Over time, passive strategies have shown better returns than actively managed funds. Moreover, the cost of those funds is much lower compared to active strategies. Together, that combination is hard to beat.

“I don’t think individual investors or money managers can generally outperform the S&P 500,” said Ted Jenkin, a certified financial planner and the CEO and founder of oXYGen Financial, a financial advisory and wealth management firm based in Atlanta. Jenkin is also a member of the CNBC FA Council.

When does it pay to diversify?

The greater a portfolio’s exposure to the S&P 500 index, the more the ups and downs of that index will affect its balance.

That is why experts generally recommend a 60/40 split between stocks and bonds. That may be extended to 70/30 or even 80/20 if an investor’s time horizon allows for more risk.

Moreover, exclusively investing in the S&P 500 on the stock side of a portfolio may be limiting if other areas of the market prove more successful in 2024.

In 2023, the S&P 500 was up around 26% for the year, besting other strategies like a U.S. small cap index fund or an international stock index fund, noted Brian Spinelli, a certified financial planner and co-chief investment officer at Halbert Hargrove Global Advisors in Long Beach, California, which was No. 8 on CNBC’s FA 100 list in 2023.

It may be tempting to throw out those other strategies and just go with the one that did really well last year, Spinelli noted.

“But I wouldn’t go overboard,” Spinelli said. “You shouldn’t be 100% U.S. large cap and let it sit there and expect the same level of returns we’ve seen over the last five years.”

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January 22, 2024

How to find hidden cameras in hotels and house rentals: We tested five ways — and one's the clear winner

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Hidden cameras are being found in hotel rooms, house rentals, cruise ships, and even airplane bathrooms, leaving many travelers to wonder:

“Could a hidden camera be watching me?”

Spycams, as they’re called, are getting smaller, harder to find and easier to buy.

From alarm clocks to air fresheners, water bottles and toothbrush holders, cameras come embedded in common household items that seamlessly blend with home decor. They can be purchased in shops or online, and through retailers like Amazon and Walmart.

And rather than having to retrieve the camera to obtain the recording, owners can stream live images straight to their phones, said Pieter Tjia, CEO of the Singapore-based tech services company OMG Solutions.

Even worse, voyeurs can sell the footage to porn sites, where it can be viewed thousands of times.

It’s no wonder why websites, from YouTube to TikTok, are filled with videos of people recommending simple ways to find hidden cameras.

But do they these suggestions work?

To find out, Tjia and his team hid 27 cameras in a home, and then provided CNBC with commonly recommended devices to find them.

In total, CNBC conducted five rounds of tests to see which method was the most effective.

Test 1: Using the ‘naked eye’

First, we examined the rooms using the easiest and cheapest method of all: the “naked eye” test.

My colleague, Victor Loh, went from room to room, noting that nothing seemed out of place or suspicious. After 20 minutes of searching, he found one camera embedded inside a working clock — tipped off because the time was wrong.

“I found one,” he said. “But it’s so well camouflaged.”

Cost: $0 | Cameras found: 1

Test 2: Using a mobile phone

For this round, Victor downloaded a popular app called Fing, which scans Wi-Fi networks for cameras. He also used his phone’s flashlight to make it easier to see camera lenses, a common online recommendation.

The app showed 22 devices were connected to the home’s Wi-Fi — but no cameras.

Tjia explained that when members of his team set up the cameras in the house, they also set up a second wireless network. They then connected the hidden cameras to that network, bypassing the home’s main network.

“Even if we didn’t do this, the app would show cameras are in the house, but not where they are located,” he said.

Victor had better luck using his phone’s flashlight. With it, he found three more cameras — in a Wi-Fi repeater, a shirt button and a teddy bear — the last one, like the clock, catching his eye because of something amiss.

“It’s not grammatically correct,” he said of the bear’s T-shirt, before finding a camera behind one of its eyes.

Tjia said most hidden cameras are made in China, where, ironically, they are banned.

Cost: $25/year for app subscription | Cameras found: 3

Test 3: Using a radio frequency detector

With only four of 27 cameras located, it was time to turn to handheld devices designed to find hidden cameras — like a radio frequency detector which beeps when it’s close to a spycam.

Those work when cameras are turned on and connected to Wi-Fi, which means they won’t find cameras that use SD cards to store data, said Tjia.

They are also prone to false alarms, he added, as we watched Victor search the rooms, for the third time, through a barrage of piercing beeps.

The device also had a built-in lens detector, but the beeping proved so distracting that Victor didn’t locate a single camera with this device. It even beeped when he was in parts of the house that had no cameras at all, said Tjia.

Cost: $100-$200 | Cameras found: 0

Test 4: Using a lens detector

Next up: a basic lens detector, which is cheap, portable and easy to use. The device emits infrared light, which reflects back from a camera lens as a red dot.

The problem? You must be close to the camera for it to work.

Lens detectors are a popular way to locate spycams, but CNBC only found two cameras with this one.

CNBC

Despite its popularity online, Victor found only two cameras with this device — one in an essential oil diffuser, and the other in a Wi-Fi mesh device.

Cost: $50 | Cameras found: 2

Test 5: Using an advanced lens detector

For the final test, Victor used a more sophisticated lens detector.

Resembling binoculars, it also accentuates light that is reflected from a camera lens. However, this device works from a distance, allowing Victor to see cameras from across the room. It also works in brightly-lit or dark rooms, said Tjia.

“Oh wow,” said Victor, as he located cameras — in a tissue box and leather bag, with another buried between files under a desk. But he noted he needed to look straight into the lens to see it. “The angle matters.”

In total, he found 11 cameras with this device — more than all the other cameras found in the other test rounds, combined.

Cost: $400 | Cameras found: 11

The final outcome

In total, Victor found 17 out of 27 cameras — not a bad result, but not a great one either, especially given the time he spent locating them.

“When you are traveling, you are really exhausted,” he said. “The last thing you want to do is spend … one hour scrutinizing every nook and cranny just to locate a camera.”

Social media posts about hidden cameras have increased nearly 400% in the past two years, according to the data company Sprout Social — with countless articles dedicated to finding a quick and easy solution to the growing problem.

But in this cat-and-mouse game, the cameras have the upper hand, said Tjia.

The detecting devices are getting better, but so are the cameras being hidden, he said.

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January 21, 2024

iRobot shares tank 30% on report EU plans to block Amazon acquisition

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Roomba robot vacuums made by iRobot are displayed on a shelf at a Target store in San Rafael, California, on Aug. 05, 2022.

Justin Sullivan | Getty Images

Shares of iRobot plunged more than 33% in extended trading on Thursday after a report said the EU’s antitrust watchdog intends to block Amazon‘s planned acquisition of the Roomba vacuum maker.

The Wall Street Journal reported the European Commission met with Amazon representatives on Thursday to discuss the deal and was told the acquisition would likely be rejected, citing people familiar with the matter.

Amazon declined to comment. A representative from the European Commission didn’t immediately respond to a request for comment.

Amazon’s stock fell slightly in extended trading.

Amazon announced it would acquire iRobot in August 2022 for $61 per share in an all-cash deal that values the smart vacuum maker at $1.7 billion.

The European Commission, the European Union’s top antitrust enforcer, opened an in-depth probe into the purchase last July. The group warned the planned acquisition raises competition concerns, saying it found Amazon may hinder iRobot’s rivals from competing on its online marketplace. Amazon could delist or reduce the visibility of rivals’ products in search results or other areas, the EC argued.

The EC is expected to rule on the deal by Feb. 14. Earlier this month, Politico reported Amazon doesn’t plan to offer concessions to resolve the group’s concerns about the acquisition.

The deal is still under review by the U.S. Federal Trade Commission. The U.K.’s Competition and Markets Authority said in June that the deal would not result in “a substantial lessening of competition” in the U.K.

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January 18, 2024

Amazon's latest layoffs hit its Buy with Prime unit

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A worker delivers Amazon packages in San Francisco on Oct. 5, 2022.

Bloomberg | Bloomberg | Getty Images

Amazon is laying off some employees in its Buy with Prime unit, the company confirmed, as it continues to look for ways to trim costs.

The cuts affect fewer than 5% of staff in the Buy with Prime division, Amazon said. Buy with Prime is a service that lets online stores offer the same two-day shipping benefits available to Prime subscribers. Amazon has expanded the program since its launch in April 2022, including tie-ups with Shopify and Salesforce.

Amazon didn’t say how many staffers are in its Buy with Prime segment.

“We regularly review the structure of our teams and make adjustments based on the needs of the business and, following a recent review, we’ve made the difficult decision to eliminate a small number of roles on our Buy with Prime team,” an Amazon spokesperson said in a statement.

The spokesperson said Buy with Prime remains “a top priority for Amazon” and the company plans to continue investing “significant resources” in the program.

Some of the affected employees worked in Amazon’s multichannel fulfillment unit, which sits alongside Buy with Prime under the “Project Santos” organization, overseen by Peter Larsen, a longtime vice president at the company, a person with knowledge of the cuts said. Multichannel fulfillment allows merchants to ship and store products using Amazon’s services regardless of whether they’re selling on the home site.

Amazon has cut more than 27,000 jobs across the company as part of rolling layoffs that began in late 2022. Job reductions have continued this year, with Amazon letting go staffers in its Prime Video, MGM, Twitch, Audible and Amazon Pay units last week. Other tech companies including Google, Discord, Xerox and Unity have also announced layoffs since the start of the new year.

Amazon said it’s assisting Buy with Prime employees who were laid off in finding new roles elsewhere within the company. Employees will continue to receive their pay and benefits for at least 60 days, and they will be eligible for a severance package.

WATCH: Amazon lays off hundreds of roles across Twitch, Prime Video and MGM Studios

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January 18, 2024

Top money managers pick the stocks they like for 2024 that aren't the Magnificent Seven

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January 11, 2024

CNBC Daily Open: The long-awaited bitcoin stamp of approval

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Representations of cryptocurrency Bitcoin are placed on a PC motherboard in this illustration taken June 16, 2023.

Dado Ruvic | Reuters

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

SEC approves
A highly anticipated and controversial decision finally arrived Wednesday, with the Securities and Exchange Commission allowing the creation of bitcoin exchange-traded funds in the U.S. that will give regular investors access to the world’s oldest and most popular cryptocurrency. The first funds are set to start trading on Thursday. The price of bitcoin, however, shed about 2%.

Wall Street ends higher
U.S. stocks ended Wednesday’s trading session higher as investors awaited the start of earnings season later in the week and also inflation data. Jump in shares of Intuitive Surgical and Lennar boosted markets. In Asia, Japan’s Nikkei 225 index breached the 35,000 mark for the first time since February 1990.

China woos investors
China has now vowed to make foreign investments easier, as was reported by state media. Chinese Vice Premier He Lifeng met with global financial executives Wednesday at a time China’s tensions with the U.S. and worries about its economic growth have kept investors wary of putting money into the country.

Inflation report awaited
December inflation data, set to be released on Thursday, could very well challenge the market’s perception of how soon the Federal Reserve will start cutting interest rates and by how much. Consumer prices would’ve likely edged higher last month, with expectations by Dow Jones pointing to a 0.2% rise in the final month of 2023, and 3.2% increase for the full year.

[PRO] Tesla versus BYD
Tesla has been an investor favorite but a sizable Chinese rival in BYD could give Wall Street’s EV darling a run for its money. The Pros will dissect whether investors should stick with Tesla or buy into the up-and-coming BYD.

The bottom line

Bitcoin just received its biggest stamp of approval, giving crypto bros their most powerful bragging rights yet.

The decision by the SEC to approve the creation and trading of bitcoin ETFs will allow for better adoption of the world’s oldest cryptocurrency by mainstream finance.

Grayscale Bitcoin Trust, that holds about $29 billion of the cryptocurrency, will likely be converted into an ETF following the decision, while big Wall Street’s BlackRock and Fidelity will also enter the playing field.

“Today’s news is possibly Bitcoin’s biggest since its launch but the approval of spot ETFs shouldn’t be viewed in isolation, given the timing of the upcoming halving in April which cuts the BTC supply and historically kickstarts the new bull market. Both these events combined could well send Bitcoin to $100,000 in 2024,” said Antoni Trenchev, co-founder and managing partner of the digital asset firm Nexo.

Trenchev also noted that “there is a temptation to say the approval of spot Bitcoin ETFs is a buy-the-rumour, sell-the-news event.”

The decision comes a day after an official SEC social media account falsely said bitcoin ETF trading had been approved. The SEC confirmed that the account had been compromised.

U.S. stocks also eked out gains Wednesday, with the S&P 500 closing 0.57% higher, while the Dow Jones industrial Average added 0.45%. The Nasdaq Composite gained 0.75%.

Later in the day, investors will also shift focus towards consumer price data which is expected to show inflation edged higher in the last month of 2023.

This could potentially bring into question whether markets are getting ahead of themselves in anticipating rate cuts by the Fed. There still remains a wide gap between what the U.S. central bank has indicated in terms loosening its monetary policy and what the market is expecting.

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January 10, 2024

Stocks making the biggest moves midday: Amazon, Lennar, GoodRX, Gilead Sciences & more

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January 10, 2024

Wall Street analysts defend this Big Tech name but express caution on banks

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January 8, 2024

Jeff Bezos Encouraged His Brother And Sister To Invest $10,000 In Amazon — Their Stake Grew 10,249,900% And Now Potentially Is Worth Over $1 Billion

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In the mid-1990s, a $10,000 investment in a nascent online bookstore seemed risky, but for Jeff Bezos’s siblings Mark and Christina, the decision may have catapulted them into the ranks of billionaires. A Bloomberg report reveals that in 1996, they each purchased 30,000 Amazon.com Inc. shares for $10,000. This investment has since grown exponentially, with each sibling’s stake potentially reaching over $1 billion today, a 10,249,900% gain.

According to an article by Luxury Launches, referencing a Bloomberg report from July 31, 2018, the stakes held by Jeff Bezos’s siblings were valued at $640 million each, based on Amazon’s stock closing price of $91 at the time. Fast forward to the present, and with Amazon’s stock price at $149, their stakes are now valued at $1.044 billion each.

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Bezos, recognizing the emerging potential of e-commerce, embarked on an ambitious venture by founding Amazon in July 1994. This was a time when the internet was primarily used by government and educational institutions. Despite these limitations, Bezos was undeterred and pursued his vision, seeing the broader possibilities that the internet could offer.

Convincing investors, including his family, of the venture’s potential despite a high risk of failure was a monumental task. Bezos cautioned his parents about the 70% risk of losing their investment. According to the book “The Everything Store: Jeff Bezos and the Age of Amazon,” he said, “I want you to know what the risks are because I still want to come home for Thanksgiving if this doesn’t work.”

In 1994, Bezos reportedly held 60 meetings with family members, friends and potential investors in an attempt to persuade them to invest in his online bookshop idea. Out of the 60 people he approached, 38 were not convinced. Years later, Bezos reflected on these early rejections, noting how some of those who declined his offer were still affected by their decision, either accepting it as part of life or finding it too painful to discuss.

Amazon’s journey to success was fraught with challenges. It went public on May 15, 1997, at $18 per share, navigating through the turbulent times of the dot-com bubble. Yet, under Bezos’s leadership, the company not only survived but flourished, expanding beyond online retail and achieving a market cap of $1.5 trillion.

Trending: This brokerage offers custom rewards for users to switch – the biggest reward so far for 1 user is $19,977.48. Will yours beat it?

Mark and Christina Bezos, despite their low public profiles, have been integral to Amazon’s story. Mark Bezos, diverging from the Amazon path, carved out a successful career in advertising and philanthropy, while Christina Bezos has maintained a discreet presence, focusing on family and philanthropic efforts.

The Bezos siblings’ journey with Amazon, from a high-risk investment to a billion-dollar return, underscores the power of visionary entrepreneurship and the potential of the digital economy. Their story, intertwined with the rise of one of the world’s most influential companies, highlights the far-reaching impact of strategic risk-taking in the rapidly evolving world of technology and commerce.

The story of the Bezos siblings and their investment in Amazon is more than a tale of financial gain; it’s an example of the potential of startups. Their success is a reminder that investing in a startup, while risky, can lead to extraordinary outcomes. It’s about spotting opportunities in visionary ideas and the courage to back them, even when the future seems uncertain.

Imagine being part of something that starts small but grows into a global phenomenon. That’s the allure of investing in startups. Today’s small online bookstore could be tomorrow’s tech giant.

Read Next:

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This article Jeff Bezos Encouraged His Brother And Sister To Invest $10,000 In Amazon — Their Stake Grew 10,249,900% And Now Potentially Is Worth Over $1 Billion originally appeared on Benzinga.com

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January 4, 2024

These 20 stocks soared the most in 2023

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(Updated with Friday’s closing prices.)

The 2023 rally for stocks in the U.S. accelerated as more investors bought the idea that the Federal Reserve succeeded in its effort to bring inflation to heel.

The S&P 500
SPX
ended Friday with a 24.2% gain for 2023, following a 19.4% decline in 2022. (All price changes in this article exclude dividends). Among the 500 stocks, 65% were up for 2023. Below is a list of the year’s 20 best performers in the benchmark index.

This article focuses on large-cap stocks. MarketWatch Editor in Chief Mark DeCambre took a broader look at all U.S. stocks of companies with market capitalizations of at least $1 billion, to list 10 with gains ranging from 412% to 1,924%.

The Fed began raising short-term interest rates and pushing long-term rates higher in March 2022 by allowing its bond portfolio to run off. That explains the poor performance for stocks in 2022, as bonds and even bank accounts because more attractive to investors.

The central bank hasn’t raised the federal-funds rate since moving it to the current target range of 5.25% to 5.50% in July, and its economic projections point to three rate cuts in 2024.

Investors are anticipating the return to a low-rate environment by scooping up 10-year U.S. Treasury notes
BX:TMUBMUSD10Y,
whose yield ended the year at 3.88%, down from 4.84% on Oct. 27 — the day of the S&P 500’s low for the second half of 2023.

Read: Treasury yields end mostly higher but little changed on year after wild 2023

Before looking at the list of best-performing stocks of 2023, here’s a summary of how the 11 sectors of the S&P 500 performed, with the full index and three more broad indexes at the bottom:

Sector or index	2023 price change	2022 price change	Price change since end of 2021	Forward P/E	Forward P/E at end of 2022	Forward P/E at end of 2023
Information Technology	56.4%	-28.9%	11.5%	26.7	20.0	28.2
Communication Services	54.4%	-40.4%	-7.6%	17.4	14.3	21.0
Consumer Discretionary	41.0%	-37.6%	-11.4%	26.2	21.7	34.7
Industrials	16.0%	-7.1%	8.0%	20.0	18.7	22.0
Materials	10.2%	-14.1%	-4.9%	19.5	15.8	16.6
Financials	9.9%	-12.4%	-3.4%	14.6	13.0	16.3
Real Estate	8.3%	-28.4%	-21.6%	18.3	16.9	24.7
Healthcare	0.3%	-3.6%	-3.3%	18.2	17.7	17.3
Consumer Staples	-2.2%	-3.2%	-5.4%	19.3	20.6	21.4
Energy	-4.8%	59.0%	51.8%	10.9	9.8	11.1
Utilities	-10.2%	-1.4%	-11.4%	15.9	18.7	20.4

S&P 500 SPX	24.2%	-19.4%	0.4%	19.7	16.8	21.6
Dow Jones Industrial Average DJIA	13.7%	-8.8%	3.8%	17.6	16.6	18.9
Nasdaq Composite COMP	43.4%	-33.1%	-3.5%	26.9	22.6	32.0
Nasdaq-100 NDX	53.8%	-33.0%	3.5%	26.3	20.9	30.3
Source: FactSet

A look at 2023 price action really needs to encompass what took place in 2022 for context. The broad indexes haven’t moved much from their levels at the end of 2022 (again, excluding dividends). We have included current forward price-to-earnings ratios along with those at the end of 2021 and 2022. These valuations have declined a bit, which may provide some comfort for investors wondering how likely it is for stocks to continue to rally in 2024.

Biggest price increases among the S&P 500

Here are the 20 stocks in the S&P 500 whose prices rose the most in 2023:

Company	Ticker	2023 price change	2022 price change	Price change since end of 2021	Forward P/E	Forward P/E at end of 2022	Forward P/E at end of 2021
Nvidia Corp.	NVDA,	239%	-50%	68%	24.9	34.4	58.0
Meta Platforms Inc. Class A	META, -1.22%	194%	-64%	5%	20.2	14.7	23.5
Royal Caribbean Group	RCL, -0.37%	162%	-36%	68%	14.3	14.9	232.4
Builders FirstSource Inc.	BLDR, -1.02%	157%	-24%	95%	14.2	10.7	13.3
Uber Technologies Inc.	UBER, -2.49%	149%	-41%	47%	56.9	N/A	N/A
Carnival Corp.	CCL, -0.70%	130%	-60%	-8%	18.7	41.3	N/A
Advanced Micro Devices Inc.	AMD, -0.91%	128%	-55%	2%	39.7	17.7	43.1
PulteGroup Inc.	PHM, -0.26%	127%	-20%	81%	9.1	6.3	6.2
Palo Alto Networks Inc.	PANW, -0.24%	111%	-25%	59%	50.2	38.0	70.1
Tesla Inc.	TSLA, -1.86%	102%	-65%	-29%	66.2	22.3	120.3
Broadcom Inc.	AVGO, -0.55%	100%	-16%	68%	23.2	13.6	19.8
Salesforce Inc.	CRM, -0.92%	98%	-48%	4%	28.0	23.8	53.5
Fair Isaac Corp.	FICO, -0.46%	94%	38%	168%	47.1	29.3	28.7
Arista Networks Inc.	ANET, -0.62%	94%	-16%	64%	32.7	22.3	41.4
Intel Corp.	INTC, -0.28%	90%	-49%	-2%	26.6	14.6	13.9
Jabil Inc.	JBL, -0.45%	87%	-3%	81%	13.5	7.9	10.3
Lam Research Corp.	LRCX, -0.81%	86%	-42%	9%	25.2	13.5	20.2
ServiceNow Inc.	NOW, +0.57%	82%	-40%	9%	56.0	42.6	90.1
Amazon.com Inc.	AMZN, -0.94%	81%	-50%	-9%	42.0	46.7	64.9
Monolithic Power Systems Inc.	MPWR, -0.23%	78%	-28%	28%	49.1	27.3	57.9
Source: FactSet

Click on the tickers for more about each company.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

Don’t miss: Nvidia tops list of Wall Street’s 20 favorite stocks for 2024

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December 30, 2023

Tech stocks just wrapped up one of their best years in past two decades after 2022 slump

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The Nasdaq MarketSite in the Times Square neighborhood of New York, on Tuesday, May 31, 2022.

Michael Nagle | Bloomberg | Getty Images

Tech stocks rebounded from a disastrous 2022 and lifted the Nasdaq to one of its strongest years in the past two decades.

After last year’s 33% plunge, the tech-heavy Nasdaq finished 2023 up 43%, its best year since 2020, which was narrowly higher. The gain was also just shy of the index’s performance in 2009. Those are the only two years with bigger gains dating back to 2003, when stocks were coming out of the dot-com crash.

The Nasdaq is now just 6.5% below its record high it reached in November 2021.

Across the industry, the big story this year was a return to risk, driven by the Federal Reserve halting its interest rate hikes and a more stable outlook on inflation. Companies also benefited from the cost-cutting measures they put in place starting late last year to focus on efficiency and bolstering profit margins.

“Once you have a Fed that’s backing off, no mas, in terms of rate hikes, you can get back to the business of pricing companies properly — how much money do they make, what kind of multiple do you put on it,” Kevin Simpson, founder of Capital Wealth Planning, told CNBC’s “Halftime Report” on Tuesday. “It can continue into 2024.”

While the tech industry got a big boost from the macro environment and the prospect of lower borrowing costs, the emergence of generative artificial intelligence drove excitement in the sector and pushed companies to invest in what’s viewed as the next big thing.

Nvidia was the big winner in the AI rush. The chipmaker’s stock price soared 239% in 2023, as large cloud vendors and heavily funded startups snapped up the company’s graphics processing units (GPUs), which are needed to train and run advanced AI models. In the first three quarters of 2023, Nvidia generated $17.5 billion in net income, up more than sixfold from the prior year. Revenue in the latest quarter tripled.

Jensen Huang, Nvidia’s CEO, said in March that AI’s “iPhone moment” has begun.

“Startups are racing to build disruptive products and business models, while incumbents are looking to respond,” Huang said at Nvidia’s developers conference. “Generative AI has triggered a sense of urgency in enterprises worldwide to develop AI strategies.”

‘Relatively early stages’

Consumers got to know about generative AI thanks to OpenAI’s ChatGPT, which the Microsoft-backed company released in late 2022. The chatbot allowed users to type in a few words of text and start a conversation that could produce sophisticated responses in an instant.

Developers started using generative AI to create tools for booking travel, creating marketing materials, enhancing customer service and even coding software. Microsoft, Google, Meta and Amazon touted their hefty investments in generative AI as they embedded the tech across product suites.

Amazon CEO Andy Jassy said on his company’s earnings call in October that generative AI will likely produce tens of billions of dollars in revenue for Amazon Web Services in the next few years, adding that Amazon is using the models to forecast inventory, establish transportation routes for drivers, help third-party sellers create product pages and help advertisers generate images.

“We have been surprised at the pace of growth in generative AI,” Jassy said. “Our generative AI business is growing very, very quickly. Almost by any measure it’s a pretty significant business for us already. And yet I would also say that companies are still in the relatively early stages.”

Amazon shares climbed 81% in 2023, their best year since 2015.

Microsoft investors enjoyed a rally this year unlike anything they’d seen since 2009, with shares of the software company climbing 58%.

In addition to its investment in OpenAI, Microsoft integrated the technology into products like Bing, Office and Windows. Copilot became the brand for its broad generative AI service, and CEO Satya Nadella described Microsoft last month as “the Copilot company.”

“Microsoft’s partnership with OpenAI and subsequent product innovation through 2023 has resulted in a market dynamic shift,” Michael Turrin, a Wells Fargo analyst who recommends buying the stock, wrote in a Dec. 20 note to clients. “Many now view MSFT as the outright leader in the early AI wars (even ahead of market share leader AWS).”

Meanwhile, Microsoft has been cranking out profits at a historic rate. In its latest earnings report, Microsoft said its gross margin exceeded 71% for the first time since 2013, when Steve Ballmer ran the company. Microsoft has found ways to more efficiently run its data centers and has lowered reliance on hardware, resulting in higher margins for the segment containing Windows, Xbox and search.

Microsoft CEO Satya Nadella (R) speaks as OpenAI CEO Sam Altman (L) looks on during the OpenAI DevDay event on November 06, 2023 in San Francisco, California. Altman delivered the keynote address at the first ever Open AI DevDay conference.

Justin Sullivan | Getty Images

After Nvidia, the biggest stock pop among mega-cap tech companies was in shares of Meta, which jumped almost 200%. Nvidia and Meta were by far the two top performers in the S&P 500.

Meta’s rally was sparked in February, when CEO Mark Zuckerberg, who founded the company in 2004, said 2023 would be the company’s “year of efficiency” after the stock plummeted 64% in 2022 due largely to three straight quarters of declining revenue.

The company cut more than 20,000 jobs, proving to Wall Street it was serious about streamlining its expenses. Then growth returned as Facebook picked up market share in digital advertising. For the third quarter, Meta recorded expansion of 23%, its sharpest increase in two years.

Where are the IPOs?

Like Meta, Uber wasn’t around during the dot-com crash. The ride-hailing company was founded in 2009, during the depths of the financial crisis, and became a tech darling in the ensuing years, when investors favored innovation and growth over profit.

Uber went public in 2019, but for a long time battled the notion that it could never be profitable because so much of its revenue went to paying drivers. But the economic model finally began to work late last year, for both its rideshare and food delivery businesses.

That all allowed Uber to achieve a major investor milestone earlier this month, when the stock was added to the S&P 500. Members of the index must have positive earnings in the most recent quarter and over the prior four quarters in total, according to S&P’s rules. Uber reported net income of $221 million on $9.29 billion in revenue for its third quarter, and in the past four quarters altogether, it generated more than $1 billion in profit.

Uber shares climbed to a record this week and jumped 149% for the year. The stock, which is listed on the New York Stock Exchange, finished the year as the sixth-biggest gainer in the S&P 500.

Despite the tech rally in 2023, there was a dearth of new opportunities for public investors during the year. After a dismal 2022 for tech IPOs, very few names came to market in 2023. The three most notable IPOs — Instacart, Arm and Klaviyo — all took place during a one-week stretch in September.

For most late-stage companies in the IPO pipeline, more work needs to be done. The public market remains unwelcoming for cash-burning companies that have yet to show they can be sustainably profitable, which is a problem for the many startups that raised mountains of cash during the zero-interest days of 2020 and 2021.

Even for profitable software and internet companies, multiples have contracted, meaning the valuation startups achieved in the private market will require many of them to take a haircut when going public.

Byron Lichtenstein, a managing director at venture firm Insight Partners, called 2023 “the great reset.” He said the companies best positioned for IPOs are unlikely to debut until the back half of 2024 at the earliest. In the meantime, they’ll be making necessary preparations, such as hiring independent board members and spending on IT and accounting to make sure they’re ready.

“You have this dynamic of where expectations were in ’21 and the prices that were paid then,” Lichtenstein said in an interview. “We’re still dealing with a little bit of that hangover.”

—CNBC’s Jonathan Vanian contributed to this report

WATCH: Rate-sensitive tech stocks making a comeback

Rate-sensitive tech stocks stage comeback despite high interest rates

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December 29, 2023

Apple's stock underperformed top tech peers in 2023 due to longest revenue slide in 22 years

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Apple CEO Tim Cook stands next to a new Apple Vision Pro headset displayed during the Apple Worldwide Developers Conference in Cupertino, California, June 5, 2023.

Justin Sullivan | Getty Images

Apple’s stock rallied in 2023, but its performance was outshined by all of its mega-cap tech peers, as the company suffered four straight quarters of declining revenue. It’s the longest such slide for Apple since the dot-com bust of 2001.

Some of Apple’s troubles this year were due to a bad economic environment for phones and computers. Over the summer, total smartphone sales were the slowest in more than a decade.

But Apple also dealt with some company-specific issues. Apple didn’t release new iPad models in 2023, the first time that’s happened in a calendar year since the product was launched in 2010. Without new models, Apple has less to promote, and older versions of the product don’t see official price cuts that boost sales.

Earlier this month, all current model iPads were shipping from Apple’s website in a day, according to Morgan Stanley analysts. That’s a sign of weak demand because with the hottest products, Apple doesn’t have enough supply to ship that quickly.

In fiscal 2023, which ended in September, Apple’s iPad revenue dropped 3.4% to $28.3 billion. On a unit basis, iPad sales were even worse, falling 15%, according to a recent estimate from Bank of America analyst Wamsi Mohan. Apple doesn’t report unit sales.

To make matters worse, new Apple Watch models were removed from Apple stores in the U.S. days before Christmas over an intellectual property dispute. After a late December appeal, the devices have been returned to store shelves, but Morgan Stanley analysts estimate Apple lost about $135 million in sales per day during the brief ban.

Even for Apple’s new products, like Mac computers, consumers showed less interest in opening their wallets for devices with minor upgrades. Sales of Mac PCs and laptops fell nearly 27% to $10.2 billion in fiscal 2023. Unit sales declined 11%, according to Bank of America’s estimate.

Apple shares still managed to jump 49% for the year as of Thursday’s close, topping the Nasdaq’s 44% gain. However, investors were better off betting on any of the other most-valuable tech companies. Nvidia shares more than tripled this year, and Meta climbed almost 200%. Tesla’s stock more than doubled, Amazon rose 83%, Alphabet jumped 59% and Microsoft gained 57%.

In order to return to revenue growth and support its $3 trillion market cap, Apple needs some new products to hit and global demand for smartphones and laptops to recover.

A big test will come early next year, when Apple’s first mixed-reality headset — the $3,499 Vision Pro — hits the market.

“We believe success with the Vision Pro is less about 2024 and more about its longer-term potential,” Morgan Stanley analyst Erik Woodring wrote in a note this month.

Assuming Apple ships 400,000 headsets, Vision Pro revenue could be about $1.4 billion next year, according to an estimate from UBS analyst David Vogt. He called the sum “relatively immaterial.”

Enthusiasm will be the key. The Vision Pro is Apple’s first completely new device since it announced the Apple Watch, and it will be sold through Apple stores. The headset could generate foot traffic and buzz for Apple’s existing products. And there’s a chance that it catches on enough to show that Apple has the lead when it comes to the future of computing.

Some problems are fixable

Looking overseas, Apple would like to see an easing of tensions between the U.S. and China.

In 2023, Apple made significant progress diversifying its centers of production away from mainland China and into countries like Vietnam and India. But its moves to expand its supply chain appear to have awakened an impulse in the Chinese government to classify Apple as a foreign company. The White House called reports that Chinese government agencies told their employees not to bring iPhones to work “retaliation.”

The Chinese government has denied them. Yet analysts are starting to worry that Chinese demand for iPhones, especially in the current quarter, is flagging. The iPhone remains Apple’s most important hardware product, accounting for about half of total company revenue.

“Heading into the holiday season, iPhone unit demand remains the key near-term debate amidst macro woes and concerns around potential share loss in China on the resurgence of Huawei,” Citi analyst Atif Malik wrote in a note this month.

Despite its struggles, Apple remains a juggernaut. The company recorded $383 billion in total revenue in fiscal 2023 and earned nearly $97 billion in net income.

Because the smartphone and PC markets were in retreat, Apple gained market share in some countries, where rivals saw steeper declines. In February, Apple said it had 2 billion devices in use, a closely watched metric that investors see as a predictor of future sales from software and services.

Apple is preparing new iPads for next year, which could boost demand, according to Bloomberg. The company has submitted a software update for its watches to the U.S. government that it hopes will clear up the intellectual property dispute that briefly banned sales. IPhones still have a speed advantage over Huawei’s new devices, partially thanks to import restrictions on chips and chip equipment.

In November, Apple CFO Luca Maestri said the company’s December quarter — its biggest of the year — will be flat compared with last year. He warned that Macs, Wearables and iPads would see a sales drop.

But according to analyst estimates, the total sales declines are in the rearview mirror, with mild growth expected in the first half of the year and acceleration after that.

“Overall, the downturn appears to be over, and we believe it is time to see mild growth,” Bank of America analyst Simon Woo wrote in a report this month.

WATCH: Apple’s Vision Pro is not expected to be mainstream hit

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December 29, 2023

Tag: amazon.com inc

Biggest price increases among the S&P 500