Microsoft CEO Sees Headwinds In 2023, but ‘Optimistic’ on US Amid Recessionary Storm

Microsoft CEO Satya Nadella, as he attends Microsoft's 'Young Innovators' Summit' in New Delhi, India, on Feb. 26, 2020. (Anushree Fadnavis/Reuters)

Microsoft CEO Satya Nadella acknowledged Thursday that “no industry is immune from macroeconomic issues,” but said he remains “optimistic” about the U.S. economy.

Speaking in an interview with CNBC, Nadella said that 2023 will definitely be a year of “challenges” similar to those faced in 2022, but added that he, as well as other business leaders, are hopeful that this tough “cycle” will come to an end, although the CEO did not say when exactly that will happen.

“Everyone has to manage their costs and demand properly,” Nadella said.

Microsoft has laid off a number of workers across multiple divisions this year amid a decline in revenue. In October, the company announced additional layoffs in an effort to cut costs ahead of what many believe to be an inevitable recession looms.

A string of other tech giants, including Facebook parent company Meta, have announced they are reducing the size of their workforce amid weaker sales.

When asked on Thursday if Microsoft will be rolling out more job cuts as growth continues to slow, Nadella said: “We’re very committed to making sure that our operating expenses and our revenue growth are sort of compatible, because, after all, we’re a company that needs to be managed super well.”

Widespread Tech Selloff

Microsoft reported net income of $17.6 billion for the quarter that ended Sept. 30, 2022, marking a decrease of 14 percent from the year prior. Its revenue, meanwhile, grew 11 percent, to $50.1 billion.

However, the stock price of the company tumbled after it forecasted $52.35–53.35 billion in revenue in the second quarter to the end of December.

The company is among a number of large firms like Google and Amazon that have seen their stock price plunge this year amid a widespread market sell-off, driven by a volatile economy and the belief that sales will be weaker as inflation soars and consumers cut back on spending.

Combined, the top five U.S. technology companies by revenue have lost nearly $4 trillion in market value this year, according to Bloomberg.

When asked Thursday how bad he thinks the economy will get going forward, Nadella remained optimistic.

“I think the United Staes, at least all the data, still shows it’s pretty robust and in fact it’s grown, even in the last quarter results, GDP growth grew,” Nadella said. “One of the fascinating things about the United States is the amount of capital that’s getting invested,” he said, pointing to new fabrication plants, power plants, battery factories, and logistics infrastructures that are being built.

“I am much more focused on observing where what is happening in terms of new growth inside the United States. So I’m very, very optimistic about the United States and, quite frankly, the world,” the CEO added.