It has been a pivotal week on Wall Street as tech giants unveiled their latest quarterly earnings reports. Among the notable players in the spotlight was Alphabet (NASDAQ: GOOGL), the parent company of Google.
While the company’s overall profit and sales figures met expectations, a closer look at individual segments, particularly its cloud division, revealed a less promising performance. Investors reacted swiftly to this revelation, leading to a record-breaking sell-off in Alphabet’s stock.
GOOGL slumps amid worst tech exodus in months
Shares of Alphabet plunged nearly 10% on October 25, marking its worst day since March 2020, The Kobeissi Letter highlighted in a post.
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In a single session, this massive sell-off erased almost $200 billion from GOOGL’s market capitalization, the popular X user added.
Why is Google stock trending lower?
A day before its stock plummeted, Google’s parent company, Alphabet, reported earnings per share (EPS) of $1.55 for Q3 2023, topping the consensus estimates of $1.45. Revenue came in at $76.69 billion, while analysts were looking for $75.97 billion.
However, the positive top and bottom line results were offset by poor figures for Alphabet’s cloud business. Notably, Google Cloud generated $8.41 billion in revenue in Q3, well below Wall Street’s estimates of $8.64 billion.
Although Google Cloud’s performance was not that bad, it looked less convincing when compared to Microsoft’s (NASDAQ: MSFT) Azure, which saw its revenue soar 29% in the latest quarter.
That said, the sell-off in GOOGL shares on Wednesday perhaps suggests that investors wanted to see more from the company’s cloud and artificial intelligence (AI) operations amid the intensifying market competition.
Broader market sell-off
Apart from Alphabet’s tepid cloud sales, the drop in GOOGL stock was also in part due to a wider investor exodus in the tech market.
Unfavorable macro conditions, such as record-high Treasury yields and anxieties ahead of upcoming economic data, also weighed on investors’ sentiment.
According to Kobeissi, October 25 marked the largest technology sector sell-off in months, sending the broader S&P 500 index to a 5-month low on the day.
Tech-oriented Nasdaq-100 fell 2.5% on the day, while the Dow Jones lost 0.3%.
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