Shares of Google parent Alphabet lost more than 5 per cent on Tuesday as a surge in costs drove what analysts said was its biggest ever contraction in gross margins, overshadowing strong first-quarter ad sales.
The dive in first-quarter operating margins, to 22 per cent from 27 per cent a year ago, follows a troubling six weeks for major US tech players, now facing a more questioning public and the prospect of tighter official scrutiny on privacy issues.
The fall in Alphabet shares following its first-quarter results on Monday evening turned them negative for the year and amounted to about a $37 billion reduction in the value of the California-based firm.
Other members of the FAANG group of tech stocks that include Amazon.com, Facebook, Netflix and Apple Inc also tracked that move lower.
At least nine brokerages cut their price targets on Alphabet shares, compared to five who raised.
But analysts were reluctant to place the blame as yet on the row over user data which has engulfed Facebook and threatens to encourage more regulation of internet companies.
“There is regulatory risk, though we have yet to find evidence that regulations will adversely impact the usefulness of Google for consumers or advertisers,” RBC analysts said.
Longer-term capital expenditures at Google nearly tripled to $7.3bn in the first quarter from $2.5bn a year ago.
_______________
Read more:
According to EU logic, breaking up Google is way forward
Is now the time to abandon big tech stocks?
_______________
The company said that continuing cost increases came from acquiring streaming rights for YouTube’s new TV service and marketing new products.
Google executives say the spending to install powerful computers and internet cables is necessary to keep up with demand for YouTube, its Google Assistant virtual helper service and data analytics tools within its Google Cloud services.
“With YouTube’s rapid growth [also in non-ad-supported services] and a greater emphasis on hardware made by Google, we think this gross margin contraction will continue,” Canaccord Genuity analyst Michael Graham wrote in a client note.
“Gross margin contracted ~370 bps y/y, that is the largest contraction in company history.”
Ad sales also suggested that there were no immediate signs of the privacy concerns affecting profits.
Alphabet’s shares have risen 25 per cent in the past year, making it the third best performing of the FAANG group, trailing only Amazon and Netflix.
The sharp declines in FAANG stocks pushed the S&P 500 and Nasdaq Composite lower on Tuesday afternoon.
Facebook and Amazon were each off nearly 4 per cent, Netflix dipped 5 per cent and Apple shed 1.6 per cent.
The technology sector sank 1.47 per cent, making it the biggest drag on the S&P 500 and the Nasdaq Composite.
Match info
Liverpool 4
Salah (19'), Mane (45 2', 53'), Sturridge (87')
West Ham United 0
The specs
Engine: 5.0-litre V8
Power: 480hp at 7,250rpm
Torque: 566Nm at 4,600rpm
Transmission: 10-speed auto
Fuel consumption: L/100km
Price: Dh306,495
On sale: now
Water waste
In the UAE’s arid climate, small shrubs, bushes and flower beds usually require about six litres of water per square metre, daily. That increases to 12 litres per square metre a day for small trees, and 300 litres for palm trees.
Horticulturists suggest the best time for watering is before 8am or after 6pm, when water won't be dried up by the sun.
A global report published by the Water Resources Institute in August, ranked the UAE 10th out of 164 nations where water supplies are most stretched.
The Emirates is the world’s third largest per capita water consumer after the US and Canada.
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Company profile
Date started: January, 2014
Founders: Mike Dawson, Varuna Singh, and Benita Rowe
Based: Dubai
Sector: Education technology
Size: Five employees
Investment: $100,000 from the ExpoLive Innovation Grant programme in 2018 and an initial $30,000 pre-seed investment from the Turn8 Accelerator in 2014. Most of the projects are government funded.
Partners/incubators: Turn8 Accelerator; In5 Innovation Centre; Expo Live Innovation Impact Grant Programme; Dubai Future Accelerators; FHI 360; VSO and Consult and Coach for a Cause (C3)
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Honeymoonish
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Elie%20El%20Samaan%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3ENour%20Al%20Ghandour%2C%20Mahmoud%20Boushahri%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%203%2F5%3C%2Fp%3E%0A
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
