Alphabet (Google stock), the parent company of Google, revealed underwhelming financial results for the third quarter. As a result of the worsening state of the global economy, businesses have become more cost-conscious, which has a negative impact on the development of advertising sales.
Google Stock (NASDAQ:GOOGL) Price Per Share
The search giant Google (NASDAQ:GOOGL) said that its revenue was $69.09 billion, which is a 6% increase over the previous year. The earnings per share came to $1.06.
Wall Street experts forecasted an increase in revenue to $71 billion, a 9% increase, with a profit per share of $1.27.
During premarket trading on Wednesday, the stock had a decrease of 5.9%.
The year-over-year increase in advertising income for Google (NASDAQ:GOOGL) was only 2.5%, bringing the total to $54.48 billion. This was far less than the $56.9 billion that was anticipated. The amount of money made from advertisements on YouTube came in at $7.07 billion, which is lower than the projection of $7.5 billion. Revenue from the Google Cloud Platform reached $6.87 billion, which was somewhat higher than the forecasts of around $6.7 billion.
When it comes to corporations that are driven by advertisements on the internet, Alphabet is considered to be the nicest home in the worst neighborhood. When the economy is weak, businesses often cut back on their advertising spending, and digital advertising now accounts for two-thirds of all advertising expenditures. However, the conventional view on Wall Street is that search ads should hold up better in a downturn than display and direct response ads. This helps explain why Alphabet shares this year have recently been down about 30 percent, while Meta (META) has lost more than 60 percent of its value.
In the earnings statement, Porat stated that “financial results for the third quarter demonstrate good underlying growth in Search and momentum in Cloud, while being hampered by foreign currency.” We are actively striving to realign our resources in order to drive the growth initiatives that are most important to us.
In the earnings announcement, the company’s Chief Executive Officer Sundar Pichai stated that the company is “committed to both investing wisely for the long term and being responsive to the economic environment.”
The conference call to discuss the company’s earnings was set to begin at 5:00 pm Eastern time. In most cases, the firm does not offer very specific direction. However, while presenting the results of the June quarter, Alphabet’s Chief Financial Officer Ruth Porat issued a warning that the business would be facing “difficult comparisons” for the remainder of the year and mentioned that several advertisers had reduced their expenditure.
According to the majority of analysts’ projections, the December quarter will bring in sales of $80 billion and a profit of $1.39 per share.
Evercore ISI analyst Mark Mahaney wrote ahead of the report that while he agreed with the prevalent view that Alphabet should be the most resilient of the online ad plays, he saw evidence of softening for Europe-related searches. This was despite the fact that Mahaney agreed with the widespread view that Alphabet should be the most resilient of the online ad plays. He added that currency continued to be a significant impediment and stated that this might put a damper on the growth of search-related ads. The company was given an Outperform rating by Mahaney, and its price objective was set at $140.
Analyst Justin Post from BofA Global Research issued a similar warning, stating that the firm was going to encounter challenging macro conditions as well as headwinds from foreign exchange, although he believes that cutting expenses will assist in 2023. He continued to recommend a Buy and set the price objective at $114.
Featured Image- Megapixl @ Miluxian
Author Valerie Remorosa 
