Though Microsoft beat sales and profit expectations last quarter, its stock plummeted 8% Wednesday morning to about $230 after the firmit would work to temper costs"materially" throughout the year as revenues in the current quarter could fall nearly $3 billion short of expectations.
Shares of Alphabet plunged a steeper 9% after the Google parent missed third-quarter sales and profit expectations in its after-hours report and said it would also focus on cutting costs this quarter; the company's YouTube advertising unit especially posted a much weaker-than-forecast $7.1 billion, versus average expectations of about $7.5 billion.
"It was an ugly night for tech earnings," says analyst Adam Crisafulli of Vital Knowledge, pointing out YouTube advertising is less resilient during economic downturns than Google's search-engine arm—a concerning sign ahead of earnings from Meta and Twitter this week. Combined, the cratering share prices of the nation's second- and third-most valuable companies erased about $253 billion in market value —pushing both stocks toward nearly two-year lows.
One bright spot: Amazon's advertising business has historically been similarly resistant to Google search, which could bode well for earnings on Thursday, but shares of the firm nevertheless joined the tech rout on Wednesday, falling nearly 4%.This week marks the busiest for earnings season, with 43% of S&P companies slated to report, but 25% of consumer discretionary firms like Walmart aren't slated to report until mid-November.