Google’s Immunity Doesn’t Quite Hold

The results took Alphabet’s share price down 3% after-hours even following a drop of nearly 4% during the market’s selloff in the regular session. The stock is down 18% so far this year through Tuesday’s session, but it has notably outperformed others in the online advertising space due to a belief that the company’s ad business, based mainly on search, was least exposed to the multi-headed challenges of growing inflation, supply chain woes and the war in Ukraine. Shares of Facebook -parent Meta Platforms—Google’s biggest rival in ads—are down 46% so far this year.

Google’s actual results won’t improve confidence in the group. The company noted in its conference call Tuesday that within the YouTube business brand advertising was strong compared with direct-response ads. That contrasts a bit with results last week from Snapchat parent Snap Inc., which reported that its brand advertising business in particular was hit by “supply chain and labor supply headwinds.” But relative to Google’s other ad segments, YouTube is also seen as more vulnerable to the surging popularity of rival video platform TikTok, which has even more significantly affected the outlook for Facebook. Meta’s share price fell another 3% after-hours following Alphabet’s results.

Google is still in excellent shape financially. The company added $70 billion to its buyback plan—after repurchasing more than $50 billion in shares over the last 12 months—despite a “meaningful increase” in capital spending planned for this year. Operating earnings of $20.1 billion for the quarter even came in 2% ahead of Wall Street’s projections despite the advertising revenue miss. But with the forces weighing down the global online ad business unlikely to abate in the second quarter, the biggest player in the business won’t remain unscathed.

Write to Dan Gallagher at dan.gallagher@wsj.com