Google parent Alphabet misses quarterly revenue estimates

Google parent company Alphabet Inc. fell short of Wall Street estimates for the first quarter on Tuesday, reporting only $68.01 billion as advertisers cut back spending against the backdrop of rising worries of a global economic slowdown.

The world’s largest provider of search and video ads saw its stock plunge by 4 percent to $2.373 at closing Tuesday after reporting the fall in revenue growth.

It had been forecast to earn $68.11 billion this quarter, up from the $55.31 billion a year ago, according to IBES data from Refinitiv.

It comes as the Dow Jones Industrial Average, S&P 500 and Nasdaq all took major hits, plummeting hundreds of points on Tuesday with big tech stocks suffering the brunt of the day’s losses. 

Among those impacted was Tesla.

The electric car firm slumped 12.2 percent over concerns that CEO Elon Musk will be too distracted and less engaged in running the electric vehicle maker after buying social media company Twitter, which saw its own fall of 3.9 percent. 

The hit to Alphabet represents a 9 percent fall in revenue growth for the company as it authorizes a $70 billion stock buyback to return capital to shareholders.

The company has notably taken a hit through its YouTube ad revenue, which reportedly fell short amid the pandemic recovery as the previous two years saw the platform’s usage skyrocket with millions of people stuck inside their homes, CNBC reported.  

Russia’s invasion of Ukraine also caused the company to take a hit after it halted much of its operations in Russia, with revenue in the European region slowing to 19 percent, a significant drop from 33 percent last year.

While Alphabet fell short this quarter, Microsoft Corp beat Wall Street profit and revenue expectations on Tuesday, reporting revenue of $49.36 billion in the third quarter, compared with $41.7 billion a year earlier. 

Analysts on average had expected revenue of only $49.05 billion, according to Refinitiv IBES data. 

Net income rose to $16.73 billion, or $2.22 per share, in the quarter ended March 31, from $15.46 billion, or $2.03 per share, a year earlier. That topped analyst targets of $2.19. 

Haris Anwar, senior analyst at Investing.com said: ‘These numbers show that customers continue to turn to Microsoft as they accelerate their shift to cloud computing and the current unsettling economic environment has not yet impacted the company’s main growth driver.’

Despite Microsoft’s positive showing, its stock fell by more than 3 percent as Wall Street took a major tumble on Tuesday.

The S&P 500 fell 120.92 points, or 2.8% to 4,175.20. The benchmark index closed the day with 95 percent of its stocks losing ground. The Dow Jones Industrial Average fell 809.28 points, or 2.4 percent, to 33,240.18.

The tech-heavy Nasdaq bore the brunt of the day’s losses with a fall of 514.11 points, or 4 percent, to 12,490.74. 

It’s the worst drop since September 8, 2020. The index is now down 20 percent so far this year as investors shun the ultra-pricey tech sector, which had made gangbuster gains for much of the pandemic. 

The blow to big tech comes as Musk nears closing a $44 billion deal to buy Twitter.

Under the terms of Musk’s agreement with Twitter, stockholders will receive $54.20 in cash for each share of common stock they owned when the deal was struck.

It represents a 38 per cent premium to Twitter’s closing stock price on April 1 – the last trading day before Musk said he had taken on a 9 per cent stake.

Musk said last week he had lined up $46.5billion in financing to buy Twitter, including using a stake of his own shares in Tesla.  

On Tuesday, Tesla fell by 12.2 percent, and Twitter fell by 3.9 percent.