Microsoft missed its profit target on Tuesday, blaming the turbulent economy.
The tech giant reported fourth-quarter profit of $16.7 billion (£13.8 billion) – or $2.23 per share.
Revenue came in at $51.9 billion (£43.1 billion), up 12% from last year.
Analysts had predicted $2.29 per share and revenue of $52.94 billion (£44 billion), according to FactSet.
Microsoft blamed “developing macroeconomic conditions and other unforeseen items” for its financial performance.
It cited supply challenges in China due to the strict COVID-19 lockdown, deteriorating personal computer market, and outages in Russia as a response to the country’s invasion of Ukraine.
Alphabet Inc, meanwhile, had a more positive performance, with revenue roughly matching analyst expectations.
Parent company Google said it saw second-quarter revenue rise to $69.69bn (£57.9bn) from $61.88bn (£51.3bn) a year ago that – roughly matching the median expectation of $69.88 billion (£58 billion).
‘Ad revenue still growing despite concerns about dwindling demand is too harsh’
Google’s advertising business accounted for 81% of quarterly revenue, with revenue coming in at $56.29 billion (£46.8 billion) – well below the median estimate of $56.67 billion ( £47.1 billion).
Investors had expected ad revenue to level off as companies cut budgets to cope with rising costs.
Companies like Alphabet are bringing in less and less cash from overseas sales, due to the strong U.S. dollar, and its shares are down more than 27% this year.
Overall profit was $16bn (£13.3bn) – or $1.21 per share, below the median estimate of $1.29.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “Alphabet’s unshakable presence in our daily lives means it falls into the category of essentials for businesses. marketing team, which is why advertising revenue is still growing despite concerns about a drastic drop in demand.
“The positive response from the latest quarterly numbers has been hard to win, given the negative market sentiment around broader tech.
“Alphabet’s essential position for marketers makes it more vulnerable to inflation, as its customer base is just as sticky as they are in this area. However, it’s not entirely immune to problems. outstanding problems from the difficult economic context.”
Shares of Microsoft fell 0.5% in after-hours trading, while Alphabet rose 3% on company results.
Microsoft ended its normal session down 2.7% and Alphabet ended the day down 2.3%.
