First modification: Last modification:
The dismal results of Alphabet Inc. (parent of Google) and Microsoft Corp. in the third quarter stoked fears of a global economic recession, amid a general rise in prices that this time affects the big technology companies, many of which depend on of advertising.
While most shares of so-called ‘Big Tech’ tech heavyweights have risen in recent weeks, it has been a dismal year for the sector overall, after an extraordinary 2020 aided by the coronavirus pandemic. Covid-19.
Netflix, Meta Platforms, Amazon, Microsoft, Alphabet and Apple are estimated to have already lost a combined $2.5 trillion in market value so far this year. And this week, the presentation of results for the third quarter, predicts an even worse picture.
Shares of Microsoft and Alphabet (Google’s parent company) began the day on Wednesday falling between 7% and 9%, respectively, after showing results on Tuesday. Meta Platforms started the day with losses of 4%.
The bad time of technology
In the third quarter of 2022, Google’s parent company, which is the world’s largest digital advertising platform by market share, disappointed Wall Street with net income falling to $13.91 billion from $18.94 billion. dollars from the previous year, as ad sales remained weak.
Meanwhile, inflation and a strong dollar led Microsoft to report its slowest growth in five years, despite posting more than $50 billion in revenue in its fiscal first quarter of 2023 (ending in September).
These results set the tone for those of other technology giants such as Meta Platforms (Facebook parent), Amazon and Apple, scheduled to report between this Wednesday and Thursday.
With analysts predicting a pullback in ad budgets due to rising prices, investors fear Meta’s business could come under pressure as its revenue relies heavily on ads.
The situation of the big technology companies is one of the consequences of a strong dollar and weak demand, in a context of high inflation and rising borrowing costs. They are also a kind of thermometer that indicates how close the world is to a recession.
With Reuters and EFE
