Google parent company Alphabet announced third-quarter revenue and profit data that fell short of analysts’ expectations, dragging down the stock price in after-hours trading by more than 6%, evaporating about 40.9 billion in market value.
This suggests that search advertising giants like Google are not immune to the slowdown in the digital advertising market. At the same time, Microsoft’s cloud business revenue in the first fiscal quarter was less than expected, and its stock price fell about 7% after the market, evaporating about 123.5 billion US dollars in market value.
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Moreover, the financial report shows that, excluding payments to distribution partners, Alphabet’s third-quarter sales were $57.27 billion, lower than analysts’ average estimate of $58.18 billion; net profit was $1.06 per share, also lower than Wall Street’s expected $1.25.
“When something goes wrong with Google, it bodes ill for the overall digital advertising market,” Evelyn Mitchell, an analyst at research firm Insider Intelligence, wrote in an emailed statement.
Rivals such as Google, Facebook, and Snapchat are vying for smaller ad budgets as rising inflation dampens growth in digital advertising. Last week, Snapchat’s parent company Snap reported its slowest quarterly sales growth on record, sending Snap shares tumbling and dragging down Alphabet’s.
Moreover, Google’s search business is more immune to economic volatility than social media advertising, but the business is already showing signs of weakness.
