Alphabet misses on revenue as YouTube falls short, inflation pressures ad sales

YouTube advertising sales of $6.9 billion missed Wall Street's target of $7.5 billion.

Google parent Alphabet Inc on Tuesday reported first-quarter revenue below expectations as YouTube sharply missed Wall Street targets and ad sales were pressured by supply-chain and inflation concerns and the war in Ukraine.

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The world's largest provider of search and video ads has been a big winner of the shift to online commerce over the past two years, but the results suggest it is struggling in the latest economic phase of the pandemic, which is bringing elevated interest rates, higher transport costs and shortages of products from couches to cars to infant formula.

Alphabet shares were down 6.5% in after-hours trading.

"Alphabet has been seen as one of the most insulated companies in the advertising space relative to peers, but sometimes you can still own the best house in the worst neighborhood," said David Wagner, portfolio manager at Aptus Capital Advisors.

YouTube advertising sales of $6.9 billion missed Wall Street's target of $7.5 billion, according to Factset.

Google’s chief business officer, Philipp Schindler, said YouTube direct response ads grew more moderately during the quarter.