Capital is going to get expensive if it already hasn’t which means the era of crazy valuations and everyone getting a puppy when they join a tech company are over. This will result in a sizable adjustment as many venture backed companies will just perish as they run out of funding the next few years.
However, this is not going to be peaches and roses for Google, Meta, or Microsoft either. The first two are reliant on the cheap Capital to help startups pay for advertising. Microsoft on the other hand has half its revenue coming from international. As the dollar strengthens relative to the other currencies Microsoft will also face the same headwinds.
In this market Amazon seems to be in the strongest position as they seem to be the most diversified. They will have headwinds on their AWS business but a lot of the startups are playing with credits anyways and haven’t started to pay Amazon. With a focus on healthcare that they seem to be doing with their recent purchases they seem to have the most strength of the big tech companies.
The lack of capital will kill many companies because there is just no way many of them have a way to get to profitability. This will be likely the big focus of the next decade, back to the power of cash flows and balance sheets. This may have unintended consequences on the broader tech ecosystem as the goodwill of these companies has been the primary driver of many of the innovations in tech the last decade.
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