How this ‘buzzing’ technology is reducing the talk of recession among tech companies

Google, Microsoft and Facebook parent Metaannounced their quarterly results recently. And all of them are back in black, with the worst seem to be behind them. The shares of these companies too have bounced back. It’s no different for many other technology companies. Technology companies in the US are apparently talking less about recession this earnings season, signaling that they are increasingly optimistic about a soft economic landing.The recession chatter has been replaced by that of artificial intelligence.

According to a Bloomberg analysis, with nearly half of the Nasdaq 100 firms having reported, executives are less frequently using words like headwinds, inflation, and recession in calls with analysts and investors. This is seen as a sharp reversal from last year, when such concerns drove steep equity declines.
AI takes winds off “recession”

Executives are said to be scrambling to elaborate on how they plan to monetize new AI products and services — be it up-selling software or manufacturing hardware to power servers and cloud infrastructures. “Collectively, this is a positive signal with respect to business prospects and profitability, a reference to how the economy remains reasonably resilient,” Mark Luschini, chief investment strategist at Janney Montgomery Scott, told Bloomberg.
According to the report, references to recession and related terms like economic slowdown are down more than 70% this quarter in earnings calls compared to a year ago. The usage is poised to decline further, as per the data compiled by Bloomberg based on the companies that have reported this season.

No more “headwinds” too
Incidentally, Federal Reserve Chair Jerome Powell too said earlier this week that the US central bank’s staff economists are no longer forecasting a recession.
Also, with inflation cooling in the US, companies have started using the term fewer times on calls. Even references to the word “headwinds”, which reportedly saw 70 mentions in the fourth quarter, slipped to 31.
The US Fed since early last year has engaged in one of the most aggressive tightening campaigns since the 1980s in an effort to curb inflation. The inflation in the US touched a 40-year high in the year 2022. June’s consumer-price report showed an inflation rate reducing.