Google’s parent company, Alphabet, reported less-than-expected numbers during the company’s third-quarter investor call. Alphabet’s earnings per share were lower than analysts at Refinitiv had estimated, with the company reporting $1.06 vs. $1.25 expected. Overall revenue was down, with Alphabet reporting a revenue decline of 6%, and YouTube dropping 2%, making up $7.07 billion. On the other hand, Google Cloud performed well in Q3: The platform exceeded analysts’ expectations with a reported $6.9 billion in revenue but also accounted for $699 million in losses. Alphabet shares dropped almost 7% to $97.6 in after-hours trading.
Alphabet’s third-quarter earnings echo the same trend plaguing other Silicon Valley companies—digital market ad revenue was slowing dramatically. Earlier in the year, amid talk of a recession and inflation, the company announced a hiring freeze, slashed funding to its in-house incubator, Area 120, shut down its digital gaming service, Stadia, and canceled the upcoming production of the Pixelbook laptop. Alphabet’s CEO, Sundar Pichai, stated that operating expense growth and headcount would decrease significantly come the fourth quarter. Cutting products and jobs aligns with Pichai’s plans to become 20% more efficient.
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