The negative results reinforced fears that inflation will continue to cut advertising spending.
Alphabet Inc, Google’s parent company, failed to estimate Wall Street’s quarterly earnings as advertisers slashed spending amid the economic downturn.
Tuesday’s negative results fueled fears on Wall Street that inflation will continue to cut advertising spending. Last week, the slowest revenue growth of smaller rival Snap Inc sparked inflationary fears in the tech sector and temporarily wiped out $40 billion in market capitalization.
Alphabet shares fell 5.8% in trading after the bell.
Alphabet’s weak results are a source of concern for other companies in the sector, especially ad-reliant Meta Platforms. Facebook’s parent company, which reports results on Wednesday, saw the stock drop 3.3% on Tuesday.
Google’s third-quarter ad revenue was $54.48 billion, up from $53.13 billion last year, but fell short of analysts’ expectations.
“We are working to reallocate resources to support our highest growth priorities,” Ruth Porat, Alphabet CFO, said in a press release.
The company said total revenue for the quarter ended September 30 was $69.09 billion, up from $65.12 billion a year earlier.
Analysts on average expect revenue to be $70.58 billion, according to Refinitiv.
“Google’s lack of earnings this quarter proves that it is not immune to the challenges facing the digital advertising industry as a whole,” said Jesse Cohen, senior analyst at Investing.com.
Alphabet’s net income fell to $13.91 billion, or $1.06 per share, from $18.94 billion, or $1.40 per share, a year earlier.
The tech giant said in July it would slow its hiring pace for the rest of the year, saying it was “not immune to economic headwinds.”
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