Alphabet’s quarterly sales growth was the weakest in almost a decade
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Alphabet, which owns Google and YouTube, published third quarter results, which were much weaker than expected. So, sales in three months grew by 6% and amounted to $ 69.1 billion. This is the fifth month in a row of a slowdown in sales growth, and this is the weakest quarterly growth for Alphabet in almost a decade, with the exception of the reporting period at the very beginning of the pandemic, in the second quarter 2020. A year earlier, in the third quarter of 2021, Alphabet reported a 41 percent increase in sales.
Other indicators of Alphabet turned out to be weaker than forecasts. Earnings per share were $1.06, while experts polled by Refinitiv had expected $1.25. YouTube’s advertising revenue fell 2% to $7.07 billion, while StreetAccount analysts predicted an increase of 3% to $7.42 billion. And this is generally the first drop in YouTube’s advertising revenue since Alphabet began publishing the financial results of this unit in 2020. Advertising revenue for all of Google grew slightly, from $53 billion to $54.5 billion. The company’s net profit fell by almost 30%, to $13.9 billion.
Analysts call this situation indicative for the entire market. “When Google stumbles, it’s a bad sign for digital advertising in general,” thinks Insider Intelligence Principal Analyst Evelyn Mitchell, adding that Google has previously been more resilient to drops in ad revenue than, for example, Facebook or Snap. “A disappointing quarter for Google means tough times ahead.”
The quarterly reporting season of the largest technology companies continued with weak indicators Microsoft. The company’s sales rose 11% to $50.1 billion, the weakest growth in this indicator over the past five years. Net income fell 14% to $17.6 billion, the biggest drop in profit in more than two years. The company is reporting a drop in demand for its computers and other technologies as consumers cut spending on such purchases due to rising prices and interest rates. Microsoft made rather pessimistic forecasts for the current quarter as well, given the increasing decline in sales of computers and tablets.
After the publication of the reporting, Alphabet shares at the close of trading on the NASDAQ exchange fell by 6.22%, Microsoft – by 5.67%.
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