When companies announced job cuts, markets set up layoff stocks to buy for investors. Stocks rallied on anticipation that companies will lower expenses and boost profits from here.

Investors expect that the company will accomplish more with fewer resources. They will cancel projects that do not add to revenue.

Shareholders are more confident with companies that re-focus their energy on their core products. A stronger product will protect its market share from competitive risks.

Investors have three stocks primed for a post-layoff pop.

Alphabet (GOOG)

Alphabet (NASDAQ:GOOG) announced on Jan. 23 that it would cut 12,000 staff. Chief Executive Officer Sundar Pichai said that the company previously enjoyed dramatic growth in the past two years.

It hired for a different economic reality than the one that exists today.

The advertising recession may start this year, even though it did not show up in Alphabet’s results. In the fourth quarter of 2022, Alphabet posted advertising revenue growing from $54.48 billion to $59.04 billion. Advertising from YouTube also increased.

The company avoided a revenue decline in Q4. Markets already anticipated slightly slower revenue from the advertising and cloud markets. This is a strong layoff stock to buy. The serious trimming of staff will sustain Alphabet’s profit margins in 2023.

The Google search unit must evolve to compete with ChatGPT, an artificial intelligence product. CEO Pichai said that Bard is the answer to ChatGPT. Bard runs on Google’s Language Model for Dialogue Applications.

Buy GOOG stock for its ad profit margin stability and its prospects in AI.

Microsoft (MSFT)

Microsoft (NASDAQ:MSFT) is getting all the attention from its ChatGPT as it pivots its Bing search to include AI.

Its overall workforce cut of 10,000 jobs through the end of FY 2023 Q3 matters just as much. The company is shifting its resources out of segments that do not need them. It is hiring in key strategic areas. The net result is a cut of under 5% of its total staff.

This is a strong layoff stock to buy. The firm will take a $1.2 billion charge in the second quarter. It will position Microsoft to capitalize on the secular growth ahead. For example, CEO Satya Nadella said that Microsoft strongly believes AI is the next platform wave that has enterprise value. AI will create new solutions and opportunities.

The company will increase the profit margins from Azure as compute storage and network grow and converge.

Zoom Video (ZM)

Zoom Video (NASDAQ:ZM) announced it would cut 1,300 workers on Feb. 7.

CEO Eric Yuan said it would cut 15% of its staff in anticipation of handling a troubling economic environment. As a result, Zoom is in a position to deliver to its customers and achieve its long-term vision.

Unlike most other CEOs, CEO Yuan will cut his salary by 98% and will forgo his FY23 corporate bonus.

Last month, Zoom increased the monthly price of its Zoom One Pro Plan by around 7%, starting March 1. This should offset customer losses as corporations cut costs. It will encourage existing customers to convert to an annual subscription to lower overall costs.

Zoom will introduce new products to expand its revenue potential. Previously, it held the Zoomtopia event, where it shared its vision of the future of unified communications. The firm is positioned to expand in the Asia Pacific region. Its tool will thrive as hybrid work accelerates.

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.