US tech stocks tank as Amazon and Google reveal disappointing results

Tech giants missed Wall Street expectations, but analysts said both groups' fundamentals are still strong

US tech stocks dropped overnight after heavyweights Amazon and Google parent Alphabet reported disappointing numbers for the third quarter.

Amazon shares dropped as much as 8 per cent in after-hours trading after it reported quarterly sales of $56.58bn (£44.16bn), missing expectations of $57.1bn.

Alphabet’s stock fell 4.7 per cent after it posted revenue of $33.74bn, missing Wall Street’s target of $34.04bn, although earnings of $13.06 per share came in well ahead of the expected $10.42 per share.

“Google’s earnings momentum remains strong,” said Haris Anwar, senior analyst at Investing.com. “But if you dig in a little deeper, there are cost pressures which are building up and are mainly responsible for this period’s disappointment.”

Connor Campbell, financial analyst at Spreadex, said the “poorly received” earnings from Alphabet and Amazon had “soured the mood on what had been a rebounding US session”.

However, Christopher Rossbach, CIO of investment firm J. Stern & Co, said the companies both remain fundamentally strong, despite missing market expectations.

“While their revenues were both slightly lower than expected, with Amazon additionally guiding slightly lower than street expectations for the next quarter, they still both show good profitability,” he said.

“Alphabet is the leader in search and advertising, and Amazon is the leader in e-commerce and cloud computing, and increasingly benefits from advertising too. The fundamentals of both companies are intact and we believe that any significant weakness is a buying opportunity for long-term investors.”

Other tech stocks that dipped in after-hours include Apple, which fell 1.6 per cent, and Twitter, which was down 2.5 per cent.