Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s upcoming second-quarter earnings could be favorable due to its advances in artificial intelligence. Google’s parent company, Alphabet, is expected to announce its earnings on Tuesday.
Both Bank of America and Wedbush have raised their revenue projections for Google. Analysts Justin Post and Nitin Bansal from Bank of America noted that the integration of the Gemini AI into Google Cloud, along with AI Overviews in Google Search, is likely to enhance sales. They expressed optimism about the potential benefits of these AI advancements for the Search business, despite initial challenges where AI Overviews faced criticism for inaccuracies. Consequently, they increased their price target for Google’s shares from $200 to $206.
Back in April, Google reported a remarkable 60% profit increase in the first quarter, attributing part of its success to AI developments. This surge led to a rise in the company’s stock value, elevating its market capitalization above $2 trillion, alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s impressive first-quarter results followed the introduction of new AI products that are part of its Gemini offerings. At the recent Google I/O developer conference, the company showcased a forward-looking AI assistant designed to operate via smart glasses, claiming that its Gemini AI is 20% quicker than the existing ChatGPT.
While Dan Ives from Wedbush expressed a more cautious outlook on AI Overviews compared to his peers, he noted that it could still positively influence Search monetization in the future. He also highlighted that AI advancements are already benefiting Google Cloud, estimating a 27% increase in Cloud revenue from the previous year.
Doug Anmuth from J.P. Morgan shared similar optimism and listed Google among the firm’s top technology stock picks, alongside Uber and Amazon, citing encouragement from progress in generative AI in light of Alphabet’s soon-to-be-released second-quarter earnings.
However, Josh Beck of Raymond James cautioned that while the current narrative surrounding Google and AI is favorable, the long-term impact of AI on Google’s sales remains uncertain.