The Tech Industry Is Crashing – Here’s Why

Take a look at the NASDAQ and you may be in for a shock. Yes, the biggest tech based companies are reeling, having lost a combined $7.4 trillion. But wasn’t it just yesterday that they were all hitting new heights, effectively raking in money hand over fist? Yes, it was. But since then none of the 15 biggest tech based companies have managed to generate a positive income.

It’s easy to say that the reasons for this market contraction are inflation and rising interest rates, but the situation is far more complicated than that. It seems that a combination of questionable investments during the world health crisis, as well as ill-advised decision making, have all come home to roost.

The World Health Crisis Burn

Look back to 2021 and the reality of the situation comes sharply into focus. As 2021 came to a close, the biggest tech companies were smiling from ear to ear, all boasting stock prices that hit impressive new peaks. It seemed like if any industry was going to benefit from the world health crisis, it was going to be the likes of Microsoft and Meta.

But as 2022 got into motion things were already starting to change. The world health crisis eased, the world gradually got back to normal, and the pain was already starting. Interest rate hikes and inflation kicked in, combined with a sharp decline in tech interest. Most consumers the world over were happy to head back to the office, get busy trying to recover from the chaos, and perhaps head online to check out the online slots Canada is known to enjoy.

The point is that the hype around working and playing from home all but faded entirely. An especially concerning trend for mega-corporation Meta; a company that had gone all-in on speculative investment.

Betting Big On A Bust

Mark Zuckerberg, CEO of Meta, decided to take perhaps the biggest gamble in tech history. He pivoted his entire multi-billion empire to try and take advantage of the world health crisis. Meta has, to date, sunk $16 billion into virtual reality (VR) and augmented reality (AR.) A spending decision based on Zuckerberg’s assumption that the world would continue to work and play from home after the world health crisis faded.

Zuckerberg may have made it big with Facebook, but his gamble with the Metaverse has not been so successful. The world has shown little to no interest in his planned VR and AR revolution, and as a result Meta’s market cap has plummeted by over 70%, wiping out roughly $600 billion in value.

Zuckerberg shouldn’t feel too red faced; Microsoft suffered a similar fate, losing $700 billion over the same period.

Tech Is On The Brink

Tech companies have enjoyed massive profits for decades, seemingly immune to just about every economic disaster. Now, finally, it seems as if the giants are feeling the pain. Most behemoth corporations will surely recover, but even if they do they’ll remember the time they felt the sting of bad investments and poorly thought out strategies.

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