Google‘s corporate parent on Tuesday posted its slowest quarterly revenue growth since 2020, the latest sign that the huge gains enjoyed by technology companies during the pandemic are fading into the rear-view mirror.
For most companies, the numbers announced by Alphabet Inc. would be a cause for celebration. But tech companies are sized up differently, with investors typically measuring them by how much growth they deliver each quarter compared to the previous year.
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Alphabet began this year with growth trends shifting dramatically downward. That already contributed to a 20% decline in its stock price since it peaked at about $3,030 in early February before a widespread sell-off in tech stocks. The shares shed another 6% in extended trading Tuesday after the latest quarterly numbers came out.
The concerns about slowing growth have become an even bigger worry amid rising interest rates aimed at tamping down the highest inflation rates in more than 40 years. Higher borrowing costs, coupled with the economic upheaval caused by the war between Russia and Ukraine, are more likely to cool off the U.S. economy and create on even bigger drag on growth.
Alphabet’s revenue during the January-March period totaled $68 billion, a 23% increase from the same time last year. That was the first time since 2020 that the company has reported as year-over-year revenue gain of less than 30%. The figure fell about $40 million below the average estimate among analysts polled by FactSet Research
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The first-quarter profit dropped 8% from last year to $16.4 billion, or $24.62 per share. That was also below the average analyst projection of $25.47 per share, according to FactSet.
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As usual, advertising funneled through Google’s dominant search engine and a vast network that snakes through most of the digital economy. Google’s ad sales totaled $54.7 billion, during the first quarter, a 22% increase from the same time last year.