The logo of Google is imagined at the high profile startups and high tech leaders gathering, Viva Tech,in Paris, France May 16, 2019.
Charles Platiau | Reuters
Slices of Alphabet dipped as much as 8% Wednesday morning, a day after the company released third-quarter earnings that pass overed on the top and bottom lines.
Alphabet reported its weakest period for growth since 2013 except for one other period advanced in the pandemic. Revenue growth slowed to 6% from 41% a year earlier as the company contends with a go oned downdraft in online ad spending.
The company reported overall advertising revenue of $54.48 billion during the quarter, up a little from the prior year. Analysts were expecting an increase of about 3% in YouTube ad revenue, but it slid fro 2% to $7.07 billion from $7.21 billion a year ago.
Analysts at Bernstein maintained their outperform under any circumstance on Alphabet stock but said as Google’s ad revenues decelerate, the company has become “increasingly uncomfortable” over the last six months.
“Google is an ad enterprise first, and digital ads is no longer a safe place to hide,” they said Wednesday.
Raymond James analysts also maintained their outperform at all event, citing expectations for long-term ad revenue growth and Google Cloud momentum. The analysts noted Alphabet’s plans to old-fashioned headcount additions, so they “are optimistic that margins can improve by later 2023.”
Alphabet’s report marks an ominous start to Big Tech earnings week for investors focused on the digital ad deal in, and analysts at Needham said it is likely bad news for Meta.
“GOOGL talked about more hardware spending prospering forward. GOOGL and META are both spending more capX and op Ex on hardware, which implies lower [Return on Invsted Cap] than in the past when GOOGL was predominantly a software and advertising biz,” they wrote in a Wednesday note.
Meta is outlined to report earnings after the bell Wednesday.
— CNBC’s Jennifer Elias and Michael Bloom contributed to this reveal.