Stocks that benefit from layoffs are the all-stars of 2023. Investors are cheering the “year of efficiency.” Although job cuts are highly unfortunate for those affected, companies cannot afford them. They “over-hired” staff on expectations that the post-pandemic growth would continue. Instead, trends changed, as did the economy.

Investors may want to consider these seven companies that cut their staff costs. These firms removed the excess resources that added to their expenses. They identified projects that would not turn a profit. In addition, they reviewed their operating capabilities. This forced the firms to output at the same level with fewer staff. As a result, shareholders should expect profits to stop falling.

Stocks that Benefit from Layoffs: Amazon (AMZN)

Amazon (NASDAQ:AMZN) announced it was cutting staff by 9,000 on Mar. 20, 2023.  It previously announced an 18,000 staff cut in Jan. The latest job cut will improve the profitability of Amazon’s cloud and advertising business. Corporate customers likely cut demand for Amazon Web Services, a cloud division that thrived for years. The 23% increase in the average price of compute instances at AWS probably hurt demand. Amazon needed to adjust staff levels to sustain its profit margins.

The economic slowdown hurt advertising demand. Amazon is getting ahead of the advertising recession by reducing its headcount in this business. For example, it cut staff from Twitch, an online gaming platform that Amazon owns.

The slow economy will hurt Amazon’s e-commerce business. Shareholders should expect revenue from the website, Amazon Fresh, and Amazon Go to fall. The company has the flexibility to not only adjust its workforce level but to close warehouses and offices. When the economy rebounds, Amazon will operate at higher efficiency and profitability.

Stocks that Benefit from Layoffs: Alphabet (GOOG, GOOGL)

Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) reduced its workforce by around 12,000, announced in Jan. 2023. CEO Sundar Pichai said that the company needs to sharpen its focus and reengineer its cost base. It is bracing to go through a difficult economic cycle ahead.

Alphabet’s Google search faces a fundamental technology shift. Basic searches will become out of date. People will rely on artificial intelligence to fulfill their search needs. The company developed Bard AI to improve the quality of search results. It comprehends the complexities of human language. Trading at a price-to-earnings ratio in the low 20s, investors may bet that Google will advance its Language Model for Dialogue Applications (called LaMDA).

Bard does not need to do much for Alphabet to monetize the AI. It only needs to serve useful search results for users. If it saves users time, it will attract more visitors. This will safeguard Google.com’s advertising revenue.

Lucid Motors (LCID)

Lucid Motors (NASDAQ:LCID) cut around 18% of its workforce or 1300 employees. This will save Lucid between $24 million to $30 million. Lucid must cut expenses to survive. Supply constraints and raw material availability limit the company’s EV unit output. In addition, the economic slowdown will hurt EV demand. Lucid needs to leverage its productivity improvements by lowering its headcount.

In the fourth quarter, Lucid posted a 28-cent per share loss. This year, it expects to produce 10,000 to 14,000 vehicles. Looking ahead, it has more than 28,000 reservations. Additionally, it has a commitment of up to 100,000 vehicles under agreement with the government of Saudi Arabia.

Lucid will still lose money at current production levels. It is among the stocks that benefit from layoffs. The market may reward investors willing to wait for the company to achieve economies of scale. By operating at a lower cost level, Lucid could report smaller losses sooner.

Meta Platforms (META)

Meta Platforms (NASDAQ:META) said that it has two goals in its year of efficiency. The first is making Meta a better technology company. The second is improving its financial performance in a difficult environment.

META stock traded below $90 late last year. The company cut 13% of its staff, or 11,000 jobs in the first round. Markets responded favorably to Meta’s second round of 10,000 job cuts. The stock gained 6% that day. Shareholders are relieved to see the company cancel hiring plans that would have added 5,000 jobs. Meta is also canceling lower-priority projects. This implies that the company will continue its efforts on projects that add to its bottom line.

Meta’s decision to flatten layers of middle management is another positive development. The company does not need layers of management that slow the decision-making process. The mature social networking platform must focus on profitability growth. Clients are cutting back on advertising. Meta requires a competitive platform that pays off for advertisers.

Microsoft (MSFT)

Microsoft (NASDAQ:MSFT) announced a layoff in Jan. 2022. It reduced 10,000 employees as part of its workforce reduction measures. 2,743 of the layoffs are in Seattle. The company is reducing its costs in the Security, Compliance, Identity, and Management units.

The software giant is pivoting its efforts in ChatGPT. The availability of AI will accelerate after Microsoft announced a preview of ChatGPT in Azure OpenAI Service. Over 1,000 customers may find innovative ways to implement the AI model.

Microsoft is one of the stocks that benefit from layoffs because it reduces support in its slowing businesses while introducing AI in its popular software products. Once it adds Open AI to the Outlook email software, Excel, and Microsoft Word, users may automate email writing. Corporations will enjoy increased productivity when workers use AI to automate repetitive processes.

The company is in the process of acquiring Activision (NASDAQ:ATVI). After regulators approve the deal, Microsoft will have a stronger gaming business that spans across mobile, console, cloud, and the PC.

Micron Technology (MU)

Micron Technology (NASDAQ:MU) announced last Dec. 2022 that it would reduce its workforce by 10%. It blamed weak demand and excess supply. In Feb. 2023, it increased the staff reduction. It would cut 15% of its workforce instead of 10%.

MU stock is considerably more attractive with the cost cuts planned. The company will cut executive salaries and will not pay bonuses. Workers have no choice but to accept the lower compensation. The semiconductor industry is suffering from excess supply. Demand for memory chips is low as customers delay or cancel system upgrades.

CEO Sanjay Mehrotra said that the recovery is progressing. Customer inventories are still high but are improving. Shipments for DRAM memory and NAND storage will increase sequentially. Investors should safely assume that inventory peaked last year. Micron may transition to sequential growth by aligning lower revenue with reduced staff costs. When the PC inventory improves and demand for smartphones rebounds, Micron stock should recover from here.

Zoom Video (ZM)

Zoom Video (NASDAQ:ZM) cut 15% of its staff, or around 1,300 people, to align the business slowdown with the uncertain global economy. Before the staff reduction, Zoom posted revenue of $1.12 billion. Its enterprise customer count of 213,000 is 12% higher than last year.

Zoom is already driving business efficiencies. As AI takes off, the company will embrace innovation by leveraging AI in its product. CEO Eric Yuan said that the company announced Zoom Smart and Meeting Summary. Both products leverage GPT-3 to augment machine learning. Zoom Smart will display multiple video feeds from one conference room. Meeting Summary, Zoom IQ, and Zoom Virtual Agent are examples of tools that layer AI technologies.

The markets are not appreciating the value that AI will bring to Zoom. Investors should consider the stock at its current levels.

On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.