Alphabet on Thursday reported lower-than-expected quarterly revenue as the Google parent's digital advertising business struggled under an economic slowdown that has choked corporate spending and triggered mass layoffs.
Shares of Alphabet, which lost about 40 per cent of their value in 2022, were down nearly 5 per cent in after-hours trading to $102.78.
Revenue from Google advertising, which includes Search and YouTube, fell to about $59 billion from $61.2 billion, as advertisers — the biggest contributors to Alphabet's sales — dialled back spending to cope with persistent inflation, high interest rates and recession fears.
Google is the world's largest digital advertisement platform by market share, making it uniquely susceptible to fluctuations in online marketing spending.
Its YouTube division has faced a surge in rival platforms, particularly TikTok, whose endless scroll of short videos is drawing younger users away.
However, Big Tech peer Meta impressed investors with a quarterly results announcement that featured promises to slash costs and boost offerings to capitalise better on advertising dollars.
Alphabet's net income fell to $13.6 billion, or $1.05 per share, from $20.6 billion, or $1.53 per share, a year earlier.
Revenue rose to $76 billion in the fourth quarter from $75.3 billion a year ago. Analysts were expecting $76.5 billion, according to IBES data from Refinitiv.
Google, which has long seen itself as an innovation leader, was caught off guard by the sudden rise of user-friendly AI apps such as ChatGPT, which is seen as a potential rival to Google's all-powerful search engine.
Chief executive Sundar Pichai last month announced a plan to lay off 12,000 people to reverse pandemic overhiring and focus on new areas, especially artificial intelligence.
Agencies contributed to this report
