Alphabet's share price plunged more than 7% in after-hours trading. The stock closed up 1.5%, hitting a record high of $1,296.20.
Major rivals in advertising such as Facebook (FB.O), Snap (SNAP.N), Amazon (AMZN.O) and Twitter (TWTR.N), which announced last quarter that quarterly revenues were higher than or in line with analyst expectations .
According to Alphabet, first-quarter revenue rose 17% year-on-year to $36.3 billion. According to Refinitiv's IBES data, Wall Street's average estimate is $37.3 billion.
The 17% growth rate was the slowest in three years, compared with a 26% increase in the same period last year.
The company said that pay-per-click advertising was down 9% from the previous quarter.
Quarterly cost increases were almost the same as revenue growth, up 16.5% from the same period last year to $29.7 billion.
For most of the past two years, Alphabet's spending has grown faster than revenue, which has caused some investors to worry. Authorities have stepped up regulation of Google’s privacy practices and restricted advertising that may have offensive content.
But positive macroeconomic signals give investors reason to believe that the company's advertising business is healthy. Since the company released its last quarter earnings report to Monday, its share price has risen 11.9%.
Approximately 84.5% of Alphabet's revenue came from Google's advertising business, compared with 85.5% in the same period last year.
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