2023 has already seen its fair share of major news in the world of business and finance. From mega mergers and new technologies to economic uncertainty and crypto crashes, it’s been an eventful year so far.
This article summarizes the biggest business and finance news stories of 2023, providing an overview of the notable events, analysis of their significance and potential impacts, as well as comparisons between major companies and financial metrics.
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Mega Mergers Continue Despite Economic Uncertainty
The year started off strong with major merger and acquisition (M&A) moves from giants like Microsoft, Broadcom, and Salesforce:
- Microsoft/Activision Blizzard – Microsoft gained approval in March from the EU and UK to proceed with its $68.7 billion acquisition of gaming giant Activision Blizzard. This deal will make Microsoft the 3rd largest gaming company globally.
- Broadcom/VMware – Chipmaker Broadcom purchased VMware for $61 billion in May. It was one of the largest tech acquisitions ever, allowing Broadcom to diversify into enterprise software.
- Salesforce/Anaplan – Cloud CRM leader Salesforce acquired Anaplan, an enterprise planning platform, for $10.7 billion in March. This supports Salesforce’s expansion into more workplace software services.
These multi-billion dollar deals occurred against the backdrop of rising inflation, interest rates hikes, recession fears, and market volatility. However, cash-rich technology giants marched forward with ambitious growth strategies through M&A, continuing the consolidation wave within the industry.
| Company | Acquisition Target | Deal Value |
|---|---|---|
| Microsoft | Activision Blizzard | $68.7 billion |
| Broadcom | VMware | $61 billion |
| Salesforce | Anaplan | $10.7 billion |
The massive size of these acquisitions gives an indication of the scale and growth strategies being pursued by global corporations, even during tumultuous economic conditions. executed utilizing strong balance sheets.
Cryptocurrency Crashes Intensify
The “crypto winter” has led to even more devastating crashes for major digital currencies in 2023:
- FTX Bankruptcy – Top crypto exchange FTX filed for bankruptcy in November 2022 amid liquidity issues and alleged fraud. Its collapse threatens over 1 million creditors.
- Bitcoin Falls Below $16,000 – The price of Bitcoin dropped over 75% from its peak to under $16,000 per coin in November 2022, evaporating over $2 trillion from the entire crypto market.
- Stablecoins De-Peg – Stablecoins like Tether that aim to be pegged 1:1 to fiat currencies temporarily lost their peg between May-July 2023. This caused panic in crypto markets reliant on stablecoins.
Once touted as the future of finance, cryptocurrencies faced their most challenging year yet in 2023 as speculation busts, scandals unfold, and skepticism mounts. Major players like FTX crumbled alongside token prices, sparking uncertainty and concern regarding the viability of digital assets.
| Metric | 2021 Year End | July 2023 | % Change |
|---|---|---|---|
| Bitcoin Price | $46,000+ | <$16,000 | -65% drop |
| FTX Token Price | $50+ | < $0.01 | Over -99% drop |
| Crypto Market Cap | $2.2 trillion | $850 billion | -61% drop |
As seen in the table above, top cryptocurrencies and the overall crypto market lost over 60% of their value. These dizzying drops outpaced even the Dotcom bubble burst, astonishing investors globally. While some crypto supporters remain stalwart, faith in cryptocurrency as a speculative asset or mainstream finance tool has certainly been shaken after the tumultuous events of 2023.
Economic Uncertainty Sparks Shift to Value Stocks
Rising inflation, interest rate hikes, supply chain woes, and recession fears defined the economic climate of 2023. As a result, Wall Street shifted from high-growth tech shares towards more stable, value-oriented stocks.
- The S&P 500 entered a bear market by June 2023, crossing the 20% decline threshold from all-time highs.
- Previously high-flying growth stocks like Tesla and Netflix saw share prices crater by 60-75% from 2021 peaks.
- Value stocks in healthcare, energy, utilities, manufacturing performed better than pricier, speculative tech shares.
| Metric | S&P 500 | Nasdaq Composite | Dow Jones |
|---|---|---|---|
| 2021 Year End | 4,766 | 15,644 | 36,338 |
| July 2023 | 3,666 | 10,925 | 29,287 |
| % Change | -23% | -30% | -19% |
The S&P 500, Nasdaq, and Dow all experienced significant declines, entrenched firmly in bear market territory. While a level of volatility is expected during periods of economic uncertainty, the extreme highs and lows showcased the skittish nature of Wall Street.
Amidst the volatility, value stocks and dividend payers attracted investor dollars due to discounted valuations and stable payouts. This represented a shift away from cash-burning technology names that thrived during the long bull run since 2009. Energy and healthcare stocks saw strong gains, while tech declined.
Remote Work Revolution Gathers Pace
The shift towards flexible and hybrid work catalyzed by COVID-19 continued gaining adoption in 2023:
- Per Pew Research data, over 60% of U.S. workers were working from home at least sometimes, up from just 23% pre-pandemic.
- Global IT spend on collaboration solutions is forecast to grow over 11% annually from 2022 onward according to IDC Research.
- Employers like Airbnb, Match Group, and Dell adopted permanent remote-first or flexible work policies citing benefits like wider talent pools and cost savings.
While back-to-office efforts exist in some sectors like banking, most knowledge economy stalwarts embraced dispersed teams and dynamic policies granting employees latitude over when and where they work. This seismic shift promises to permanently alter how global business operates and re-think location strategy.
Alongside their own remote-work force build-outs, technology giants are seizing this trend’s potential too. Amazon, Google, Microsoft, and Zoom amongst others now actively market software and services that facilitate hybrid-work within their stacks. This has created a feedback loop where tech innovation supports adaptable work, driving spend in digital collaboration tools for global businesses navigating this evolution.
| Metric | 2019 | 2023 | 2025 Forecast |
|---|---|---|---|
| Hybrid Work Adoption Rate | 16% | Over 60% | Over 85% projected |
| Annual Growth in Remote Collaboration IT Spend | 6% | 11%+ | 15%+ projected |
Inflation Cools But Remains High By Historical Standards
Persistently elevated prices for staples like food, fuel, and housing defined the inflation story of 2023. Key trends include:
- Annual CPI inflation dropped from 9.1% in June 2022 to 6.4% by June 2023, but remains drastically above the Fed 2% target rate
- Despite some relief, latest inflation figures are the highest since the early 1980s by historical standards
*categories like groceries (+12% YoY) and shelter (+8% YoY) saw sizable price hikes in 2023 that squeeze household budgets.
The Fed enacted a series of aggressive 0.75% interest rate hikes to curb demand and control unsustainable price rises. This fast pace of policy tightening – at levels not seen since the 1990s – indicated the Fed’s strong commitment to fighting inflation.
| Category | June 2022 Inflation | June 2023 Inflation |
|---|---|---|
| All Items | +9.1% | +6.4% |
| Food at Home | +12.2% | +12% |
| Gasoline | +59.9% | +43% |
| Shelter | +5.6% | +8% |
Food, fuel, and housing accounted for about half of the total rise in inflation this year. Combined with market uncertainty causing 401k declines, the cost crunch on essentials proved a potent one-two punch squeezing household prosperity and dampening sentiment.
The Fed says they may keep rates higher for longer until inflation returns close to their 2% target. This suggests further cooling is still required to unwind the massive price surges since early 2021 across much of the economy.
Artificial Intelligence Investment Goes Mainstream
Investor appetite for AI startups reached new heights in 2023, with private funding and M&A breaking records against the backdrop of generational progress in AI capabilities:
- In Q1 2023 alone, funding for AI startups doubled year-over-year to over $30 billion globally per Pitchbook. Deal count topped 670 publicly known rounds.
- M&A deal value involving AI targets is already over 3X higher YoY, expecting to cross $200 billion in total deal value soon according to PWC research.
- Advances in foundation models like ChatGPT signaled the arrival of utility-grade AI to the public consciousness. Adoption is accelerating.
| Funding Metric | 2022 Year Total | 2023 Q1 Annualized | % Change YoY |
|---|---|---|---|
| AI Investment | $93.5 billion | $120+ billion projected | 28%+ |
| AI M&A Deal Value | $89 billion | Over $200 billion projected | 100%+ |
| AI Unicorns | Over 325 | 400+ projected | 20%+ |
From boosting deal making to minting new unicorns, 2023 represented a banner year for realizing AI’s commercial potential. Investors took notice in a major way.
Catalyzed by the diffusion of advanced algorithms, abundant data, and computing power, synthetic media, speech AI, computer vision, personalized recommendations, and other groundbreaking applications are reaching mainstream readiness.
Venture funding flooded into the ecosystem, while M&A swelled as larger corporations raced to stake their claim. Industry heavyweights like Google, Meta, and Microsoft now dedicate ever-growing shares of R&D towards AI initiatives as well.
Key Business Trends and Predictions
Based on the major events, transformations, and news unfolding in 2023, we can extract several likely trends for business in the years ahead:
Consolidation Continues – Flush with cash and facing slower organic growth prospects, mega corporations seem primed to accelerate acquisition deals to expand into tangential markets, incorporating new capabilities. Expect heightened M&A especially amongst cash-rich technology giants.
Remote Work and Collaboration Spend Take Off – Supporting hybrid staff with tools facilitating dynamic teamwork regardless of geography appears it will become the norm for global business. IT investment sustaining flexible location strategies will keep booming.
Rise of AI Across Industries – What was once bleeding edge may fast be becoming best practice. From personalization to process automation, AI’s steady democratization thanks to accessible building blocks seems poised to permeate business use cases across sectors. Expect aggressive adoption by leaders.
Value and Dividends in Focus – After over a decade of outsized gains from speculative tech bets, market uncertainty swung the pendulum aggressively back towards stable value stocks and dividend payers. This shift may prevail until clarity returns around inflation and growth prospects.
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Frequently Asked Questions
Q: How did the Microsoft/Activision Blizzard deal finally gain regulatory approval?
A: Microsoft gained FTC approval by committing to keep Call of Duty available on PlayStation consoles for 10 years. This allayed anti-competition concerns regarding exclusion from key gaming content.
Q: Could the failure of major cryptocurrencies spell the end of crypto adoption altogether?
A: While speculative trading and unstable projects may decline, core crypto technology like blockchain still holds transformative potential across finance and beyond. Regulated digital currencies issued by central banks seem to still have a future.
Q: What category of value stocks performed particularly well amidst 2023 uncertainty?
A: Healthcare stocks significantly outperformed broader indices like the S&P 500. Defensive sectors like pharma and medical devices provide steady revenues resistant to economic cycles, making them safe haven picks.
Q: Which major tech company adopted the most flexible remote work policies in 2023?
A: Apple pioneered location-agnostic work by allowing corporate staff to work remotely indefinitely while providing enhanced work-from-home support. This shift was notable given Apple’s reputation for in-office culture.
Q: Will inflation keep slowing or accelerate again in 2024?
A: Consensus suggests cooling inflation in 2023 paves the way for price stability in 2024. However, certain categories like food and energy remain vulnerable to supply shocks which could reignite price hikes. The path may not be linear.
That summarizes the biggest topics in business and finance news this year – from market uncertainty to remote work transformations, crypto volatility to inflation, AI aspirations to M&A ambitions, 2023 has already proven an eventful period. The trends established and lessons learned set the stage for how global business navigates still-unfolding changes in the years ahead.
