Google parent Alphabet Inc has missed Wall Street estimates for quarterly revenue as advertisers cut back on spending in the face of an economic slowdown.
The negative results on Tuesday reinforced worries on Wall Street that inflation will continue to hurt advertising spending. Last week, smaller rival Snap Inc’s slowest-ever revenue growth rate sent inflation fears through the tech sector and temporarily wiped out $40bn in market capitalisation.
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Shares in Alphabet fell 5.8 percent in trading after the bell.
Alphabet’s weak results raise concerns for other companies in the sector, especially advertising-dependent Meta Platforms. The Facebook parent, which reports results on Wednesday, saw shares drop 3.3 percent on Tuesday.
Google’s advertising revenue was $54.48bn in the third quarter, compared with $53.13bn last year but came in below analysts’ expectations.
“We’re working to realign resources to fuel our highest growth priorities,” said Ruth Porat, Alphabet’s chief financial officer, in a press release.
The company said total revenue was $69.09bn in the quarter ended September 30, compared with $65.12bn a year earlier.
Analysts on average expected revenue to be $70.58bn, according to Refinitiv data.
“Google’s earnings miss this quarter proves it’s not immune to the challenges facing the digital advertising industry at large,” said Jesse Cohen, senior analyst at Investing.com.
Alphabet’s net income fell to $13.91bn, or $1.06 per share, from $18.94bn, or $1.40 per share, a year earlier.
The tech giant said in July it would slow the pace of hiring for the rest of the year, saying it was “not immune to economic headwinds.”