Google parent Alphabet Inc. reported the slowest quarterly sales growth in two years, as macroeconomic pressures weigh on the market for digital ads.
The Wall Street Journal reports Alphabet posted $69.69 billion of second-quarter revenue on Tuesday, up 13% from the same period last year. That marked the slowest rate of growth since the second quarter of 2020, when the pandemic crimped demand for advertising in some areas, including travel.
Google, 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. The slowdown, after disappointing results from social-media companies Twitter Inc. and Snap Inc. last week, suggests further weakness in an industry critical to the health of many internet companies.
A pullback in spending by some advertisers reflected “uncertainty about a number of factors that are challenging to disaggregate,” said Alphabet Chief Financial Officer Ruth Porat.
Alphabet’s second-quarter sales trailed Wall Street expectations by almost $190 million. Net income fell 14% to $16 billion, below the consensus estimate of analysts surveyed by FactSet.
YouTube, Google’s video-streaming business, generated $7.3 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 climbed 4.8% compared with the same period last year, after they rose more than 14% in the first quarter.
The slowdown in growth on YouTube and Google’s business brokering ads on third-party websites “primarily reflects pullbacks in spend by some advertisers,” Ms. Porat said.
Sales in the Google Cloud division rose 36% from a year earlier to $6.28 billion in the second quarter. The business recorded an operating loss of $858 million during the quarter, reflecting Google’s heavy spending push as it attempts to catch up to Amazon.com Inc. and Microsoft Corp. in the cloud market.
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