The tech sector is a mixed bag. It will only reward selective investors who anticipate the demand recovery. In the storage market, Seagate (STX) could potentially stage a recovery.
Seagate posted revenue of $1.89 billion, down by 39.4% Y/Y. It expects Q3 of $2.0 billion. This suggests that inventory is falling. The firm also turned off factories last year to lower output and supply. It will sell more new products and fewer of the older ones.
Microsoft (MSFT) cut staff ahead of its earnings report. Although revenue will fall in the coming quarters, Azure OpenAI services are a growth prospect. The company started the OpenAI partnership over three years ago. Enterprises could realize value from this AI service.
Microsoft will commercialize ChatGPT on Azure. Before that happens, it needs to build commercial partnerships.
In the near term, Microsoft customers are cautious with their spending, given the macroeconomic headwinds. Consider holding MSFT stock.
IBM announced a 1.5% cut in its workforce along with its Q4 results. The cuts will come from the workers who stayed after the Kyndryl and Watson Health spinoffs.
IBM’s infrastructure is a headwind going into 2023. To support a rebound, it needs to meet its client’s demand for new technology development.
