Sales at Alphabet, owners of Google and YouTube, have slowed sharply as companies cut their digital advertising budgets.
The tech giant said revenue rose just 6% to $69 billion in the three months ended Sept. 30, compared with growth of more than 40% in the same period last year.
It was the company’s weakest growth in nearly a decade outside of the onset of the pandemic.
The update increased concerns about a slowdown in the economy.
Microsoft also said Tuesday that growth had slowed amid weaker sales of computers and other technology.
Consumers and businesses around the world have cut spending amid fears that rising prices and interest rates could plunge the global economy into recession.
A strong US dollar has also hurt American multinationals and made it more expensive to sell products overseas.
Alphabet’s earnings fell nearly 30% to $13.9 billion in the quarter as YouTube ad revenue fell for the first time since the company began public reporting.
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“We are sharpening our focus on a clear set of product and business priorities,” said Sundar Pichari, Alphabet’s chief executive.
He added that the tech giant “invests responsibly for the long term and responds to the economic environment.”
Microsoft announced that its revenue rose 11% to $50.1 billion in the three months ended September.
This was the slowest quarterly revenue growth in five years as weaker demand hurt PC sales and growth in the cloud computing division.
Xbox video game sales also plummeted.
Big tech companies have seen their sales and stock prices skyrocket during the pandemic as locked-down consumers became increasingly dependent on technology.
But the fate of the sector looks bleaker in the current climate.
In recent months, Alphabet has said it’s slowing down hiring while Microsoft has cut jobs.
Many other tech companies have decided to lay off employees, including Netflix and Twitter, or slow down the pace of hiring, such as B. the social media platform Snap.
Alphabet and Microsoft shares fell sharply in after-hours trading on Tuesday.
“If Google stumbles, it bodes badly for digital advertising in general,” said Evelyn Mitchell, principal analyst at Insider Intelligence, noting that Google’s core website has historically been more resilient to falling ad spend than social media sites like Facebook or Snap.
“This disappointing quarter for Google means tough times as market conditions continue to deteriorate.”
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