Shares in Alphabet look set to plunge about 8% in pre-market trading, which would slash the market cap of Google's parent company by about $70 billion to $831 billion, as investors lashed out after a mixed first-quarter earnings report.
"We delivered robust growth led by mobile search, YouTube, and cloud with Alphabet revenues of $36.3 billion, up 17 per cent versus previous year, or 19 per cent on a constant currency basis", said Ruth Porat, CFO of Alphabet and Google.
Google's advertising revenue, its key moneymaker, grew by 15 percent to $30.7 billion - slower than investors had hoped.
Google CEO Sundar Pichai reiterated those remarks, saying that the entire industry was facing "year-on-year headwinds". Basically, Samsung, OnePlus and other premium Android phone makers are giving Google some real competition. In an interview with Bloomberg TV, she also shrugged off Amazon's foray into advertising and said there's still lots of room for growth for all digital ad companies because so much marketing money is still spent offline. Capital spending, which Alphabet always warns can be lumpy from quarter to quarter, was $4.64 billion, down from $7.08 billion in the fourth quarter and $7.3 billion a year ago. Last year, Alphabet had grown its revenues by 26 percent this quarter. The company is expected to introduce lower-priced Pixel devices next month.
Mounting losses at Google's famous "moonshots" won't have helped matters.
Newer units that are producing noticeable revenue have lagged in market share, including Google's consolidated hardware unit and Google Cloud, which sells computing and data storage services to businesses.
Sleepwalking Warriors snap to behind 'ultimate weapon' Durant
The Los Angeles Clippers pushed the Golden State Warriors to the brink in the first round, with a hard-fought six-game series. Not many predicted this series to go to a Game 6, especially by way of virtue of the Warriors losing two of three home games.
And Google's costs could jump further if governments globally follow through on threats to rein in the ability of apps to track users for advertising purposes. The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). By the end of Alphabet's call with analysts, the stock had fallen 7%.
Excluding advertising commissions that Google pays to customers, Alphabet's overall revenue was $29.5 billion - also falling short of the $30 billion analysts were expecting. Facebook is at about 20 per cent.
But the results were underwhelming to investors, and they were further burdened by an European Union antitrust fine of nearly $1.7 billion.
Not counting the $1.7 billion fine, earnings would have hit $11.90 a share.
Operating margin excluding the fine was 23 per cent, up from 22 per cent in the year-ago period.