Analysts from Wedbush, J.P. Morgan, and Bank of America predict that advancements in artificial intelligence will positively impact Alphabet’s second-quarter earnings, which are set to be announced after the market closes on Tuesday.
Both Bank of America’s Justin Post and Nitin Bansal have increased their revenue expectations for Google, attributing this boost to the integration of the Gemini AI system into Google Cloud and enhanced AI Overviews in Google Search. In their recent research note, they expressed optimism about the growing integration of AI across Google’s services, suggesting that a wider rollout of AI Overviews could lead to increased activity in the core Search business. Despite some initial challenges with the AI tool, which garnered humorous criticism for errors, the analysts raised their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase for the first quarter, driven in part by its AI advancements, leading to a surge in stock price and pushing its market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The company has released a series of new AI products as part of its Gemini offerings, unveiling an advanced universal AI assistant at the Google I/O developer conference, capable of interacting through smart glasses. Google asserts that its latest Gemini AI is 20% faster than the current version of ChatGPT.
While Wedbush’s Dan Ives expressed more caution regarding AI Overviews, he acknowledged that they could eventually support Search monetization. He also highlighted the positive impact of AI on Google Cloud, anticipating a 27% revenue increase in that sector compared to the previous year.
J.P. Morgan analyst Doug Anmuth shared a positive outlook, including Google as one of the firm’s top recommended tech stocks alongside Uber and Amazon, citing encouraging progress in generative AI ahead of the earnings announcement. However, Raymond James analyst Josh Beck cautioned that while the current AI narrative is favorable, the long-term impact on Google’s sales remains uncertain.