US tech giants Alphabet Inc. and Microsoft Corp. reported on Wednesday a loss of momentum in their respective top lines for the third quarter.
Google-parent Alphabet stated that its revenue rose 6% year-over-year to $69 billion in the three months ending September, its slowest revenue growth since 2013, citing reduced advertising budgets as the reason for the sluggish increase.
The company’s cloud business generated $6.87 billion in revenue, posting a surge of 38%. On the other hand, its video-sharing platform YouTube brought in $7.07 billion in ad revenue, a 2% decline from last year.
The drop was the second straight quarter YouTube presented a slowdown in its revenue growth.
Meanwhile, Microsoft’s revenue was up 11% to $50.1 billion in the third quarter, although it was the firm’s slowest revenue growth since March 2017, as it faced a strong US dollar and lower demand for its computers and other technology.
Washington-based Microsoft typically posts quarterly revenue increases of 12% to 22.
Slowing Economy Hits Major Tech Companies
The decline in sales at Alphabet and Microsoft came as consumers and businesses worldwide rein in their spending due to higher prices and interest rates, which have raised concerns about a global recession.
The greenback’s strong performance has also hit domestic firms as overseas selling becomes more expensive.
Microsoft expects PC and cloud computing demand to remain weak this year as its business clients cut back.
Tech behemoths have seen a significant surge during the COVID-19 pandemic as lockdown measures prompted consumers and employees to stay home, leading them to rely more on technology.
However, the pandemic-fueled tech boom has been easing, and the sector’s current outlook appears muted.
In recent months, Alphabet has slowed the pace of its hiring, while Microsoft has reduced its workforce. Other tech firms, including Netflix Inc. and Twitter Inc., have also moved to cut jobs, while Snap Inc. hit the brakes on recruitment.