Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s upcoming second-quarter earnings announcement, which is set to occur after the market closes on Tuesday. They believe that the company’s advancements in artificial intelligence (AI) will contribute to positive results.
Bank of America’s Justin Post and Nitin Bansal have increased their revenue projections for Google, highlighting the impact of integrating the Gemini AI technology into Google Cloud and improving AI features in Google Search. In a recent research note, they stated, “We remain positive on growing AI integrations across Google’s ecosystem and think a broader rollout of AI overviews will help drive higher activity in the core Search business.” Despite some initial challenges with the rollout of AI overviews, they have raised their price target for Google shares from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, partly attributed to its AI initiatives. As a result, the company’s stock surged, enhancing its market capitalization to over $2 trillion, positioning it among tech giants like Apple, Microsoft, and Nvidia.
Google’s strong first-quarter results followed a series of new AI product releases under the Gemini platform. At its recent Google I/O developer conference, the company introduced a future AI assistant capable of operating through smart glasses. Google claims that its updated Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed some caution regarding AI Overviews, he noted that it could eventually support Search monetization. He also affirmed that AI is already benefiting Google Cloud, predicting a 27% rise in Cloud revenue compared to the previous year.
J.P. Morgan analyst Doug Anmuth echoed these positive views, naming Google among its top tech stock picks, alongside Uber and Amazon. He expressed his team’s encouragement regarding the progress of generative AI as Alphabet prepares to unveil its second-quarter earnings.
However, Raymond James analyst Josh Beck cautioned that although the current narrative surrounding AI and Google appears favorable, it remains uncertain whether AI will sustainably drive the company’s sales in the long term.