US companies from tech giants Alphabet and Microsoft to GE and toymaker Mattel reported big slowdowns in growth or warned things were going to get worse, fanning recession fears and driving down stocks.
The gloomy reports spilled into Asia on Wednesday (Oct 26), with South Korean chipmaker SK Hynix saying the memory chip market is facing “unprecedented deterioration” and it plans to cut investment next year by more than 50 per cent. Its third-quarter profit plunged 60 per cent.
South Korean flat-screen maker LG Display posted a bigger-than-expected quarterly loss.
The rash of disappointing results points to a host of problems in the global economy, including soaring inflation and interest rate hikes that have battered consumer demand.
US consumer confidence ebbed in October, data showed Tuesday, after two straight monthly increases, amid heightened inflation concerns and worries of a possible recession next year.
After years of turbo-charged growth, Microsoft posted its slowest rise in sales in five years and Google parent Alphabet grew just 6 per cent last quarter, its slowest pace since September 2013 barring a small quarterly decline in 2020.
Google, which many had expected to be more resilient because of its status as the world’s largest digital advertising platform by market share, shocked the market with weaker-than-estimated advertising revenue as customers in the insurance, mortgages and cryptocurrencies industries tightened their ad budgets.
“Despite being seen as one of the most insulated companies in the advertising space relative to peers, Google’s poor quarter is the latest sign that worsening fundamentals and a tough macroeconomic environment are prompting advertisers to cut back on spending,” said Jesse Cohen, senior analyst at Investing.com.
Google’s results bode ill for Facebook parent Meta Platforms, which is especially reliant on advertising and reports results on Wednesday. Last week, its smaller rival Snap Inc forecast no revenue growth for the holiday quarter, setting off warning bells in the social media industry.
Alphabet said it plans to cut hiring by more than half.
Conglomerate GE, which is in the process of breaking up into three companies, said it will reduce global headcount by a fifth at its onshore wind unit, which has been battling higher raw material costs due to inflation and supply-chain pressures.
Shares in Alphabet slumped 7 per cent in trading after the bell. Microsoft fell 2 per cent and chipmaker Texas Instruments, which forecast quarterly revenue and profit below estimates, was down 5 per cent. Shares in Spotify, which also warned on slow advertising growth, slid 4 per cent. Meta shares fell 4 per cent.