What's going on?

Alphabet�s profit may have fallen short of expectations late on Tuesday, but its stock still made the grade, initially rising 3%.

What does this mean?

Alphabet�s overall revenue, made up mostly of Google�s advertising business, was a little higher than investors had forecast. That�s despite advertisers on its websites � which tend to be from �consumer cyclical� sectors like travel, autos, and retail � having yanked much of their ad spending in March. Not that it was much of a surprise, mind you: customer spending in those industries ebbs and flows with the economy�s fortunes. So even though user engagement on platforms like YouTube likely increased thanks to a homebound audience, travel firms like Booking.com � which normally spends $4 billion a year with Google � have, for obvious reasons, paused ads altogether (tweet this). Alphabet�s own costs, however, aren�t quite as flexible � meaning its quarterly profit came in lower than hoped.

Why should I care?

The bigger picture: You cut, we bleed.

Alphabet is America�s sixth-largest public company, and its decision to cut its marketing budget in response to coronavirus-strained revenues will have knock-on effects on the wider economy. Microchip-makers hoping for a boom ahead of the tech giant�s new smartphone launch later this year, for instance, might suffer. And sorry, chipmakers, but it gets worse: Apple�s reportedly delayed the manufacturing of its new flagship phone.

For markets: Looking for something long term.

Analysts expect Alphabet�s ad revenue to have accelerated by next year, once the global economy reopens and companies start vying for consumers� attention again. Longer-term investors think Alphabet�s non-ad businesses like Google Cloud � as well as other ventures like Waymo, DeepMind, and Verily � might now come to the fore. Very little of the potential value of those segments is currently reflected in Alphabet�s share price, so if new investors decide to take advantage of that oversight by buying up Alphabet�s shares, existing investors could be in for a windfall.