Thursday, December 1, 2022
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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 early trading while undercutting US indices.

Gafam’s “G” and “M” excite the market. Alphabet, parent of the Google search engine, and Microsoft fall sharply at the start of the session on Wall Street, punished by disappointing results.

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

The two “big engineers” unveiled quarterly accounts that raised eyebrows among investors. Alphabet thus posted revenue from July to September that rose 6% over a year, its weakest growth since 2013, while net profit came in well short of expectations of $14 billion.

Online advertising struggles

“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. totaled $7.07 billion vs. $7.42 billion dollars expected, notes Naeem Aslam, market analyst at AvaTrade.

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

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

The cloud descends from its cloud

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

“Cloud computing revenue was lower than expected and for traders this was the main event,” said Naeem Aslam. “The company’s forecasts did not live up to expectations,” he adds.

Cited by Reuters, group CFO 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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