Google Sales Growth Expected to Slow

Google parent Alphabet Inc. is expected to report the slowest quarterly sales growth in two years, as macroeconomic pressures weigh on the market for digital ads, reports The Wall Street Journal.

The company, which has a dominant share in the markets for internet search, navigation and video streaming, is considered a bellwether for the strength of online advertising. Any slowdown, on the heels of weak results from social-media companies Twitter Inc. and Snap Inc. last week, would suggest further weakness in an industry critical to the health of many internet companies.

Alphabet is expected to post $69.87 billion of second-quarter revenue on Tuesday, up almost 13% from the same period last year, according to the consensus estimate of analysts surveyed by FactSet. That would be the slowest rate of growth since the second quarter of 2020, when the pandemic crimped demand for advertising in some areas, including travel.

As markets react to inflation and high interest rates, technology stocks are having their worst start to a year on record. WSJ’s Hardika Singh explains why the sector — from tech giants to small startups — is getting hit so hard. Illustration: Jacob Reynolds

Signs of caution are already appearing. Google Chief Executive Sundar Pichai said this month the company would slow hiring for the rest of the year, urging employees to be “more entrepreneurial, working with greater urgency, sharper focus, and more hunger than we’ve shown on sunnier days.” A Google spokesman said last week it would pause most new hiring for two weeks so that teams can better plan staffing needs.

YouTube, Google’s video-streaming business, is expected to generate $7.49 billion in advertising revenue during the second quarter, extending a slowdown in growth as it competes for viewers with services such as ByteDance Ltd.’s TikTok. Analysts expected sales to climb 7.0% compared with the same period last year, after they rose more than 14% in the first quarter.

Investors will be closely watching whether Google’s search business “can continue its remarkable run” after cracks have begun showing in YouTube and the broader online advertising sector, analysts at Bernstein wrote last week.