Alphabet investors shouldn't ignore the warning signs: Martin Peers
OPINION: For a market that has typically been seen as concentrating on the future, investors can sometimes take a surprisingly backward view. Consider their upbeat reaction to Alphabet’s earnings, reflected in the stock’s jump Wednesday.
As encouraging as it might be that second-quarter revenue came close to what analysts expected — although the 13 per cent growth rate was still the slowest since the pandemic-crushed year of 2020 — investors ought to be focusing on the next few quarters. And on that subject, nothing that Alphabet executives said late Tuesday after the Google parent issued its results could be interpreted as upbeat.
It’s not just that Chief Financial Officer Ruth Porat emphasized that “tough” comparisons with last year’s bountiful earnings results would continue to “weigh on year-on-year growth rates” for the second half. Or that she and other Alphabet executives repeatedly batted away questions about the near future by referring to “uncertainty” about business conditions.
More notable was that Porat indicated that the impact of a hiring slowdown would “become more apparent in 2023.” That implies Alphabet didn’t slow hiring as a short-term response to current economic circumstances but with an eye to what conditions will be like next year, which shouldn’t thrill anyone.