Tech ETF Falls as Alphabet Earnings Miss Sparks Ad Revenue Worry

(Bloomberg) -- An earnings miss from Google-parent Alphabet Inc. sent an exchange-traded fund tracking technology stocks lower as worries grew that Amazon.com is sucking money from the rest of the digital economy.

The Invesco QQQ Trust ETF, ticker QQQ, fell as much as 0.6 percent in post-market trading after Alphabet reported first-quarter sales of $29.5 billion, excluding payments to distribution partners, below Wall Street estimates of $30.04 billion. Net income was $6.66 billion, or $9.50 a share, versus $9.4 billion, or $13.33 a share, a year earlier, the company said. The company’s shares fell 7.5 percent.

Consumers have increasingly been going straight to Amazon.com Inc. to hunt for products, and the e-commerce giant has been chipping away at Google’s ad market lead recently. Amazon said last week that first-quarter sales in its “other” segment, which is mainly advertising, increased more than 30 percent to $2.72 billion. Its digital franchise has grown into the third-largest in the U.S., trailing Google and Facebook Inc., according to estimates from EMarketer.

“We’re in a very momentum-driven market, and it’s zero or one,” David Katz, chief investment officer of Matrix Asset Advisors in New York, said in an interview. “People either love earnings or they hate earnings. The market is focusing today, obviously not on the earnings, but rather on the revenues and saying, ‘Hey they’re losing.’ Part of the issue is that Facebook had such a good revenue quarter even with all their problems, so I don’t think anybody expected Google to miss.”

Shares of Alphabet make up about 9 percent of QQQ’s holdings. Apple Inc., the fund’s second-largest member, will report earnings on Tuesday after the bell.

To contact the reporter on this story: Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Chris Nagi, Richard Richtmyer

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