In the short-term, sales of Alphabet and Microsoft have slowed significantly. This shows a decline in business and could be cause for alarm.
Alphabet, which includes Google and YouTube, received just 6% in sales over the three-month period.
The healthcare company saw its weakest quarterly growth in nearly a decade over the past three months.
Microsoft said demand for its computers, cell phones and other technology had weakened.
Sales rose by 11% in 2015 to $50.1 billion, marking its slowest revenue growth in five years. Without this data I wouldn’t have been able to compare the year’s averages against previous years.
Consumers and businesses around the world have been cutting back as prices go up and interest rates go up. This has fueled fears of a global recession, which could make progress in uncertain times extremely difficult.
An American multinational has seen revenue decrease as the US dollar has approached $100.
Profits at Alphabet fell 29% to $13.9 billion in the first quarter, as YouTube ad revenues declined for the first time since Alphabet started to report them publicly.
The sales growth of this firm has slowed for five consecutive quarters.
Google is sharpening their focus in order to be responsive to the current economic environment.
“When Google stumbles, it’s a bad omen for digital advertising at large,” said Evelyn Mitchell, principal analyst at Insider Intelligence. She noted that in the past, Google has been more resilient to ad spending downturns than social media sites like Facebook or Snap.
Google’s business is hard to predict. One thing is for sure, though: this quarter has been challenging. If the earnings trend continues, business will likely get much more difficult.
Sentence rewriter
Business customers are constantly assessing how they can reduce the costs and optimize their technology. Microsoft is doing its part by continuing to develop new products that monitor, maintain and improve productivity.
Microsoft has also been dealt a significant blow in the sales of their Xbox video game business.
The rise in sales of technology-driven products was a major contributing factor to the pandemic, as locked-down consumers and workers relied more each day on their technological devices. But their fortunes look bleaker today, in an environment that is not fully supportive of new innovations within the sector.
In recent months, Alphabet has slowed hiring and Microsoft has cut jobs.
Some tech companies have decided to lay off staff, including Netflix and Twitter. Other companies have been slower to recruit, including Snap.
Microsoft shares fell sharply in after-hours trading on Tuesday. This can often be caused by an overhang of today’s investors, who buy the stock with the expectation that it will keep rising.