Tech Stocks Rise Modestly After Apple’s Plans to Slow Hiring and IBM’s Disappointing Outlook

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Technology stocks were holding up early Tuesday following a report that Apple plans to slow hiring and spending next year, and after better-than-expected earnings from International Business Machines were overshadowed by the company’s muted outlook.

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Apple (ticker: AAPL) rose 0.4% in premarket trading Tuesday to $147.67 after Bloomberg reported that Apple plans to slow hiring and spending growth in 2023 in response to a potential economic slowdown. The iPhone maker joins other technology companies such as Meta Platforms (META), Alphabet (GOOGL) and Microsoft (MSFT) that have indicated they would be slowing hiring amid rising recession risks.

Apple closed with a loss of 2.1% on Monday.

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As for IBM, disappointment about the company’s near-term outlook was pressing the stock despite a 9% increase in second-quarter sales. IBM lowered its outlook for free cash flow this year to $10 billion, at the low end of a previous range of $10 billion to $10.5 billion.

IBM shares dropped 5% to $131.24 in premarket trading Tuesday. Coming into Tuesday, the stock has gained 3.3% this year.

IBM CEO Arvind Krishna told Barron’s in an interview the revised cash flow number reflects $200 million related to the suspension of operations in Russia, as well as cost inflation and foreign exchange effects. The CEO noted that IBM hasn’t changed its forecast for $35 billion in free cash flow for the three years through 2024.

Analysts at Evercore said in a research note they believed IBM was “executing rather impressively specially given macro and f/x centric headwinds,” adding that the focus will remain on the company’s ability to show free chase flow and profit margin expansion “specially if we end-up in a recession scenario.” Evercore maintained its In-line rating on the stock and $140 price target.

Share of other tech giants were rising modestly in Tuesday’s premarket session. Meta gained 0.7%, Amazon.com (AMZN) rose 0.6%, Alphabet was up 0.8%, Microsoft rose 0.9%, and Oracle (ORCL) gained 0.6%.

Write to Joe Woelfel at [email protected]

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Credit: www.marketwatch.com /

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