The unpleasant results fueled fears that inflation would continue to undermine ad spending.
Alphabet Inc, Google’s parent company, has missed Wall Street revenue forecasts for the third quarter as advertisers reduce their spending in the face of an economic downturn.
The negative results on Tuesday fueled Wall Street’s concern that inflation will proceed to harm ad spending. Last week, Snap Inc’s slowest-ever rate of revenue growth sent inflation fears through the tech world, wiping out $40 billion in market capitalisation.
Alphabet shares fell 5.8 percent in after-hours trading.
The poor performance of Alphabet raises concerns for other companies in the sector, particularly advertising-dependent Meta Platforms.
The stock of Facebook’s parent company, which reports earnings on Wednesday, fell 3.3 percent on Tuesday.
Google’s ad revenue was $54.48 billion in the 3rd quarter, up from $53.13 billion the previous year, but it fell short of analysts’ anticipations.
In a press release, Alphabet’s chief financial officer, Ruth Porat, stated, “We’re working to reorient resources to boost our highest growth priorities.”
The company reported total revenue of $69.09 billion in the fiscal quarter ended September 30, up from $65.12 billion the previous year.
According to Refinitiv data, analysts expected revenue of $70.58 billion on average.
“Google’s earnings miss this quarter demonstrates that it is not immune to the challenges confronting the digital advertising industry as a whole,” Jesse Cohen, senior analyst at Investing.com, said.
Alphabet’s net income fell to $13.91 billion, or $1.06 per share, from $18.94 billion, or $1.40 per share, the previous year.
The tech giant announced in July that it would slow recruitment of new employees for the rest of the year, citing the fact that it was “not immune to economic headwinds.”
