Alphabet investors are worried about rising digital ad prices

On Tuesday, worries in the digital media sector were caused by disappointing ad sales at Alphabet Inc. Advertisers cut their spending as the economic downturn hit Google's parent company.

Google is the world's biggest digital advertising platform by market share. The negative results destroyed many expectations that the company would stay strong in a weakening economy. Also, Wall Street began to worry more about continuing cuts in advertising spending due to inflation.

Ruth Porat, Alphabet's chief financial officer, said that the decrease in overall ad revenue was connected to a very high figure in the previous quarter. She added that the decline in YouTube ad sales was due to cuts in ad spending by some advertisers.

Sophie Lund-Yates, a lead equity analyst at Hargreaves Lansdown, said that investors, who are very sensitive to changes, were also shocked by the slowdown.

Alphabet's net income dropped to $13.91 billion, or $1.06 per stock, from $18.94 billion, or $1.40 per stock, in the previous year. Analysts' forecasts of $1.25 per stock in net income failed to materialize.

Alphabet CEO Sundar Pichai held a conference call with analysts. He said that continuing of evaluating projects and making course corrections would be made as necessary.