Alphabet disappoints in the first quarter of the year. Net profits for the group that controls Google were $ 16.4 billion, down $ 24.62 per share versus the expected $ 25.91. The turnover was 68.01 billion, up 23% but lower than the expected 68.11 billion. The stock lost 4% after the market.
Microsoft, on the other hand, beat forecasts in its fiscal third quarter, with 49.4 billion in revenue, up 18%, versus the expected 49.05 billion. Earnings were $ 16.74 billion, up from $ 15.46 billion a year earlier, equal to earnings per share of $ 2.2 instead of the assumed $ 2.19. The stock also lost 3% after the market, a sign of uncertainties today on the valuations and performance of the tech sector. The cloud segment continued to grow for the company.
Alphabet and online advertising
Alphabet’s stock, under pressure like many tech brands after past surges and during the pandemic, is down 18% year to date. One of its jewels, its subsidiary YouTube in social media and video sharing, was expected to increase advertising revenue by 23% to 7.4 billion. It scored only 6.87 billion, a rise below expectations. The company and its Google search engine in particular are less impacted by Apple’s recent targeted ad restrictions because they don’t use mobile apps. But they also registered slowdowns.
Microsoft and the cloud
Microsoft, whose stock has fallen 19% since the beginning of the year, has relied primarily on the march of its cloud services to boost business in recent years. The Intelligent Cloud division, which primarily includes Azure, has risen in the last three months by 26% to 19.05 billion in revenue. Azure and related services alone was expected to increase by 45% in particular and grew by 46%. Microsoft is also committed to acquiring video game giant ActivisionBlizzard for $ 68.7 billion, but the Federal Regulators of the FTC recently asked for more information before approving the deal. The operation is expected to be completed on June 30th.
The difficult season of Big Tech
The quarterly season for the tech and internet greats appears to be more difficult than in the past. A bitter disappointment came from the first quarter of 2022 of Netflix, the leader of the streaming: reported the first drop in subscribers and above all expected a decline of two million paying users in the current second quarter. The stock sold more than a third of its stock market value in response and is down 66% since the beginning of the year.