Sundar Pichai, CEO of Google LLC, speaks at the Google Cloud Next ’19 event in San Francisco, California, US, on Tuesday, April 9, 2019.

Michael Short | Bloomberg | Getty Images

Shares of Alphabet fell more than 6% on Wednesday in the company’s worst day since March 2020 after it posted third-quarter earnings on Tuesday that missed the top and bottom lines.

The company reported its weakest period of growth since 2013, except for one other period at the start of the coronavirus pandemic. Revenue growth slowed to 6% from 41% a year earlier as the company grappled with a continued decline in online advertising spending.

The company reported total advertising revenue of $54.48 billion in the quarter, up slightly from a year earlier. Analysts had expected an increase of about 3% in YouTube ad revenue, but it fell about 2% to $7.07 billion from $7.21 billion a year ago.

Analysts at Bernstein kept their outperform rating on Alphabet shares, but said that while Google’s ad revenue has been falling, the company has become “increasingly uncomfortable” over the past six months.

“Google is an advertising business first, and digital ads are no longer a safe place to hide,” they said Wednesday.

Analysts at Raymond James also maintained their outperform rating, citing expectations for long-term ad revenue growth and Google Cloud momentum. Analysts noted Alphabet’s plans to slow staff additions, so they “are optimistic that margins can improve until later in 2023.”

Alphabet’s report marked an ominous start to the big tech earnings week for investors focused on the digital ad market, and analysts at Needham said it was likely bad news for Meta.

“GOOGL is talking about more spending on hardware going forward. GOOGL and META spend more capX and op Ex on hardware, implying lower [Return on Invsted Capital] than in the past when GOOGL was primarily a software and advertising business,” they wrote in a note on Wednesday.

The meta is scheduled to report earnings after the bell on Wednesday.

— CNBC’s Jennifer Elias and Michael Bloom contributed to this report.

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