Getty Images; Chris Ratcliff | Bloomberg | Getty Images
Shares of Amazon and Google’s parent company Alphabet have just closed their biggest monthly declines since the 2008 financial crisis.
The internet giants both posted weaker-than-expected quarterly results this week, hit by a combination of macroeconomic factors, the war in Ukraine and tough comparisons with explosive numbers during the pandemic.
Amazon fell 23.8% in April, its biggest drop since falling 25.4% in November 2008, the same month that Google fell 18.5%. Alphabet had its worst month since then, dropping 18% in April.
In the first months of 2022, investors turned away from technology for fear of rising inflation and rising interest rates. Russia’s invasion of Ukraine in February, the subsequent spike in fuel prices and continued labor shortages began to affect corporate results.
The last time Amazon and Google saw this kind of sell-off was at the height of the global financial crisis, when borrowers defaulted on home loans at record rates and many top financial institutions went bankrupt. . Lehman Brothers collapsed in September 2008, followed by a series of big Wall Street bailouts.
Tech stocks were crushed across the board. The Nasdaq fell 11% in November, after falling 18% in October.
It’s been a mixed earnings season so far for the Big Tech class. Facebook reported better-than-expected earnings, although it missed revenue and told investors second-quarter sales could fall from a year earlier. Apple beat expectations but spooked investors after warning that current-quarter sales could be hit by supply constraints.
On Thursday, Amazon gave a weak forecast for the current quarter, and growth rates stalled at their lowest level since the dot-com meltdown in 2001. Earlier in the week, Google missed sales and earnings, signaling a huge shortfall in its YouTube segment, where revenue grew only 14%.
While both stocks have suffered so far this year, their trajectories have diverged significantly in 2021. Alphabet was the best performing Big Tech stock of the year, rising 68%. Amazon was the worst of the pack, gaining 2.4%.
LOOK: There’s not much confidence in tech stocks right now, says Jefferies’ Brent Thill