Google parent Alphabet on Tuesday reported quarterly earnings that fell short of market expectations as belts tightened in the digital ad market that drives its revenue.
Alphabet said it made a profit of $14 billion in the third quarter on ad revenue that grew just 6 per cent to $69 billion when compared with the same period of last year.
Aside from one period at the start of the Covid pandemic, that would mark the weakest revenue growth at Alphabet for any quarter since 2014.
“When Google stumbles, it’s a bad omen for digital advertising at large,” said Insider Intelligence analyst Evelyn Mitchell.
“This disappointing quarter for Google signifies hard times ahead if market conditions continue to deteriorate.”
Alphabet shares slipped 5.6 per cent to $98.60 in after-market trades that followed the release of the earnings report.
Google’s foundation in advertising on its heavily used search engine does give it an advantage, however, over other ad-reliant tech firms such as Meta, Snap and Twitter, the analyst added.
“We’re sharpening our focus on a clear set of product and business priorities,” Alphabet chief executive Sundar Pichai said in an earnings release.
“We are focused on both investing responsibly for the long term and being responsive to the economic environment.”
Alphabet chief financial officer Ruth Porat said the financial results in the quarter showed “healthy fundamental growth in Search and momentum in Cloud” computing revenue, but suffered from foreign exchange rates given the strong US dollar.
“We’re working to realign resources to fuel our highest growth priorities,” Porat said.
Big tech firms are grappling with multiple challenges, from inflation to the war in Ukraine, and results in general for the quarter have been muted.
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