Alphabet (google): Undermined by disappointing results, Alphabet (Google) and Microsoft fall on Wall Street

(BFM Bourse) – The two tech behemoths lost more than 7% each in the first exchanges, at the same time beating down the American indices.

The “G” and the “M” of Gafam tense the market. Alphabet, parent of the Google search engine, and Microsoft are down sharply at the start of the session on Wall Street, penalized by disappointing results.

Alphabet thus lost 7.6% to 96.46 dollars while Microsoft also dropped 7.6% to 231.72 dollars. These two Wall Street heavyweights dragged the American indices with them, the Nasdaq Composite losing 1.3% and the S&P 500 falling 0.3%.

The two “big techs” unveiled quarterly accounts that raised eyebrows among investors. Alphabet thus published a turnover from July to September up 6% over one year, its weakest growth since 2013, while its net profit came out well below expectations at 14 billion dollars.

Online advertising is struggling

“Alphabet reported earnings per share (EPS) of $1.06 vs. expectations of $1.25 and produced revenue of $69.09 billion vs. guidance of 70.42. amounted to 7.07 billion dollars against 7.42 billion dollars “expected, notes Naeem Aslam, market analyst at AvaTrade.

Like television groups in France, the group is suffering from budget cuts from advertisers in digital advertising as well as competition from new media, in particular the social network TikToK.

Microsoft for its part, published revenues for its first quarter of its staggered 2022-2023 fiscal year of $ 50.1 billion, up 11% year on year, the weakest in five years on a quarter, according to Reuters, for net profit down 14% to 17.5 billion dollars, penalized by unfavorable exchange rate effects.

The cloud descends from its cloud

Azure, its flagship brand of cloud computing (dematerialized computing) grew “only” by 42% excluding currency effects, a figure below expectations, notes Bloomberg, while this indicator is closely watched by the market.

“Cloud computing revenue was lower than expected and for traders this was the main event,” Naeem Aslam said. “The company’s forecasts fell short of expectations,” he adds.

Quoted by Reuters, the group’s chief financial officer, Amy Hood, told analysts that Azure’s growth is expected to slow by five percentage points in the fourth quarter compared to the third at constant exchange rates.

“On the outlook, Microsoft was more pessimistic in predicting that weak PC demand could lead to a 30% drop in Windows revenue in the second quarter,” said Michael Hewson of CMC Markets.

Julien Marion – ©2022 BFM Bourse

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