Google (GOOGL  ) shares were down more than 11% following the company's Q3 results which showed a miss on the top and bottom line. Like other mega-cap tech companies, it's shifting to cost control and is curbing hiring plans.

Another disappointment is that YouTube ad revenue growth has stalled which has been a major growth engine of the company. Overall, the company is contending with the same challenges as Facebook (META  ) but to a lesser degree - it's feeling an impact from a slowing economy which is leading companies to pull back on ad spending and seeing some loss of market share due to Tiktok.

Overall, Google shares are down 36% YTD which is wider than the S&P 500's (SPY  ) 18% decline. Like its peers, the company has become quite cheap from a valuation basis with a forward P/E of 15.8 and 25.9% profit margins that are double that of the S&P 500.

Inside the Numbers

In Q3, Google reported $1.06 in earnings per share which fell short of expectations of $1.25 per share in earnings. Revenue was up 6% and came in at $69.1 billion which was below expectations of $70.6 billion. This was a sharp slowdown from 41% growth in last year's Q3.

YouTube generated $7.1 billion in ad revenue which was below expectations of $7.4 billion. This was a 2% decline from last year. The company noted slowing ad spending from industries like cryptocurrencies, insurance, loans, and mortgages.

Google Cloud revenue topped expectations at $6.9 billion vs $6.7 billion. This is one part of the company that continues to grow at an impressive rate - 38%. Traffic acquisition costs (TAC) also fell short at $11.83 vs $12.38.

On the conference call, management stressed that the company is 'realigning resources and shifting priorities' to focus on the highest focus areas for growth. The company said that some of the economic challenges impacting its top and bottom line were a potential recession, inflation, rising rates, and a slowdown in ad spending.

Some of its cost cuts include shelving the Pixelbook laptop, cutting funding to its in-house incubator, and shuttering its digital gaming service, Stadia. It's also slowing down its hiring plans, as talent makes up the biggest part of the company's costs.