Alphabet shares tank as Google cloud revenue weakens

Google parent Alphabet’s cloud division missed estimates for third-quarter revenue on Tuesday as an uncertain economy and high interest rates forced companies to trim their budgets.

Shares of the Mountain View, California-based company fell more than 4% in extended trading.

Fears of a slowing global economy have forced companies to curb spending on cloud-related services including expensive AI tools, which has caused revenue growth at Google’s cloud unit to slow to 22.5% in the third quarter, from 28% in the prior three-month period.

While advertising spending has been strong in some sectors such as retail and travel, industry executives and analysts have noted a pullback in budgets in some areas, affecting Alphabet’s major source of revenue.

The company recorded ad revenue of $59.65 billion in the third quarter, compared with $54.48 billion a year earlier.

It reported a net profit of $19.69 billion for the July-Sept. period, compared with $13.91 billion a year earlier.

Revenue for the quarter ended Sept. 30 stood at $76.69 billion, compared with estimates of $75.97 billion, according to LSEG data.