Microsoft and Google are part of the big tech companies and it seems that things are not looking good for both of them. Microsoft and Google have both been affected by a slowdown in sales which has further intensified fears of a slowdown in the economy.
The parent company of YouTube and Google Alphabet recently reported an increase of only 6% in its sales. Overall, the value of the final sale is $69 billion which is less than the forecast due to the advertising budget cuts. Since the major business Alphabet is digital ads, a downturn in online ad spending directly impacts the company's bottom line.
Looking back at the historic results, this is the first time in almost a decade that Alphabet reported such weak quarterly growth.
On the other hand, Microsoft is also worried about a slowdown in the demand for tech products such as computers. Overall, the sales of Microsoft increased by 11% which is one of the slowest growths in the last 5 years. The final value for the sales of Microsoft products & services turns out to be around $50.1 billion only.
High-Interest Rates & Fears Of Recession
On a global level, both businesses and consumers are cutting back on their spending. There are several reasons for this such as high inflation, higher interest rates, and even fears of a recession.
If we talk about the US tech companies, in particular, a stronger US dollar is also hurting their overseas sales. When overseas sales are converted back into USD, it leads to less money due to the recent strength of the US dollar.
That's why the profits of Alphabet were only $13.9 billion after dropping almost 30%. Part of the reason for this drop was a decline in the ad revenues generated from the YouTube platform.
As for Microsoft, it also facing a decreased demand for its cloud computing, PC, and other products. In fact, the popular console gaming product Xbox is also facing a slowdown in sales.