Big Tech tumbles as results sound alarm bells

Posted on October 26, 2022Comments Off on Big Tech tumbles as results sound alarm bells
2/2

© Reuters. FILE PHOTO: Smartphone is seen in front of Microsoft logo displayed in this illustration taken, July 26, 2021. REUTERS/Dado Ruvic/Illustration

2/2

(Reuters) – Grim results from Alphabet (NASDAQ:) Inc and Microsoft Corp (NASDAQ:) stoked fears of a global economic downturn and slammed the brakes on a fragile recovery in stock markets ahead of earnings from other tech megacaps.

Shares of the Google-parent and Microsoft fell about 6% in premarket trading. Meta Platforms Inc, which is scheduled to report after markets close on Wednesday, was trading 4% lower.

Amazon.com Inc (NASDAQ:) and Apple Inc (NASDAQ:), both due to report on Thursday, were down about 4% and 1%, respectively.

Nasdaq futures tumbled 1% after hitting a near three-week high on Tuesday as the latest results underlined the challenges faced by the broader tech sector – from high inflation and fast rising interest rates to waning demand and a towering dollar.

While most Big Tech stocks have edged higher in the past few weeks, overall it has been a bleak year for the sector. Netflix (NASDAQ:), Meta, Amazon, Microsoft, Alphabet and Apple have already lost a combined $2.5 trillion in market value so far this year.

“The results of the big technology firms were seen as a key determining factor in market sentiment going into the U.S. third quarter reporting season and both Microsoft and Alphabet have given investors reason to worry,” said Laith Khalaf, AJ Bell’s head of investment analysis.

Alphabet missed Wall Street’s target for revenue growth in the third quarter as ad sales remained weak, while inflation and a strong dollar led Microsoft to report its slowest topline growth in five years.

Nearly a dozen analysts cut their price target on Alphabet, slashing it by as much as $30, while six analysts lowered their targets on Microsoft.

Like Google, Meta depends on ads for a majority of its revenue and analysts are forecasting a pullback in budgets for advertising as decades-high inflation pinches purses.

“Investors will be bracing for Meta’s results with some trepidation, with a common thought being that if Google’s struggling, the rest of the tech pack faces a marathon climb,” said Sophie Lund-Yates, an analyst at Hargreaves Lansdown (LON:).

More worrisome was that growth at Azure, Microsoft’s cloud platform and one of its most successful business lines, is slowing, a caution for Amazon’s cloud business.

Shares of Spotify Technology also dropped after the company flagged pressure from falling ad sales on Tuesday.

Europe’s tech index fell 1.5% to lead sectoral losses in the region.

Source link

Comments Off on Big Tech tumbles as results sound alarm bells