
Big Tech declines as results raise red flags
- Tech News
- October 27, 2022
- No Comment
- 185
Shares of parent Tech companies Google and Microsoft fell about 6% in premarket trading, while Meta Platforms traded 4% lower.
Gloomy results from Alphabet Inc and Microsoft Corp raised fears of a global economic slowdown. They criticized the drag on stock markets’ fragile recovery ahead of gains from other tech giants.
Shares of parent companies Google and Microsoft fell about 6% in premarket trading. Due to the release of a report after markets closed on Wednesday, Meta Platforms Inc was trading down 4%.
Amazon.com and Apple Inc, scheduled to launch on Thursday, are down 4% and 1%, respectively.
Nasdaq futures fell 1% after hitting a three-week high on Tuesday. Recent results highlight the challenges facing the broader tech sector, from rising inflation and rapidly rising interest rates to falling demand and a stronger dollar.
While most major tech stocks have risen in recent weeks, the year has been generally gloomy for the sector. Netflix, Meta, Amazon, Microsoft, Alphabet, and Apple have already lost $2.5 trillion in combined market value so far this year.
“Results from major tech companies were seen as a key driver of market sentiment in the US third-quarter reporting season, with both Microsoft and Alphabet giving investors cause for concern,” he said. Laith Khalaf, head of investment research at AJ Bell.
Alphabet missed Wall Street’s revenue growth target in the third quarter as ad sales remained weak, while inflation and a strong dollar prompted Microsoft to report its slowest growth in five years.
Nearly a dozen analysts have lowered their price target on Alphabet by as much as $30, while six analysts have lowered their price target on Microsoft.
Like Google, Meta relies on advertising for most of its revenue, and analysts expect ad budgets to shrink as inflation has risen for decades.
“Investors will be preparing for the Meta results with some trepidation, with the general idea that if Google is in trouble, the rest of the technology is in for a big upside,” said Sophie Lund-Yates, an analyst at Hargreaves Lansdowne.
Even more worrying is the slowdown in growth at Azure, Microsoft’s cloud platform and one of its most successful lines of business, and it’s a warning to Amazon’s cloud business.
Shares of Spotify Technology also fell after the company pointed to pressure from lower ad sales on Tuesday.
The European tech index fell 1.5% to lead regional sectoral losses.
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