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Google parent Alphabet on Oct. 25, 2022 reported quarterly earnings that fell short of market expectations as belts tightened in the digital ad market that drives its revenue. Alphabet said it made a profit of $14 billion in the third quarter on ad revenue that grew just 6 percent to $69 billion when compared with the same period of last year.KIRILL KUDRYAVTSEV/AFP/Getty Images

Google parent Alphabet Inc. missed Wall Street estimates for quarterly revenue on Tuesday as advertisers cut back on their spending in the face of an economic slowdown.

The negative results reinforced worries on Wall Street that inflation will continue to hurt advertising spending. Last week, smaller rival Snap Inc’s slowest-ever revenue growth rate sent inflation fears through tech sector and temporarily wiped out $40 billion in market capitalization.

Shares in Alphabet fell 5.8% in trading after the bell.

Alphabet’s weak results raises concerns for other companies in the sector, especially advertising-dependent Meta Platforms. The Facebook parent, which reports results on Wednesday, saw shares drop 3.3% on Tuesday.

Google’s advertising revenue was $54.48 billion in the third quarter, compared with $53.13 billion last year but came in below analysts’ expectations.

“We’re working to realign resources to fuel our highest growth priorities,” said Ruth Porat, Alphabet’s chief financial officer, in a press release.

The company said total revenue was $69.09 billion in the quarter ended Sept. 30, compared with $65.12 billion a year earlier.

Analysts on average expected revenue to be $70.58 billion, according to Refinitiv data.

“Google’s earnings miss this quarter proves it’s not immune to the challenges facing the digital advertising industry at large,” said Jesse Cohen, senior analyst at Investing.com.

Alphabet’s net income fell to $13.91 billion, or $1.06 per share, from $18.94 billion, or $1.40 per share, a year earlier.

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