Analysts from Wedbush, J.P. Morgan, and Bank of America believe that Google’s recent advancements in artificial intelligence are likely to enhance its performance for the second quarter earnings report, which Alphabet, Google’s parent company, is scheduled to release on Tuesday.
Following the report of another quarterly loss, shares of Trump Media saw a 7% decline.
The analysts from Bank of America, Justin Post and Nitin Bansal, have revised their revenue projections for Google upwards, attributing this increase to the integration of Gemini into Google Cloud and the AI Overviews feature in Google Search. They expressed optimism about the growing use of AI across Google’s platform, suggesting that broader implementation of AI Overviews could lead to increased activity in Google’s core Search business. This comes despite some initial challenges during the rollout of AI Overviews, which generated some mockery online due to errors and inaccuracies. Post and Bansal have also adjusted their price target for Google’s stock from $200 to $206.
In April, Google reported an astonishing 60% rise in profits for the first quarter, largely influenced by its AI developments, resulting in a surge in its stock price and pushing its market value beyond the $2 trillion milestone, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s successful first quarter was preceded by several launches of new AI products under its Gemini AI initiative. During its Google I/O developer conference, the company introduced an advanced AI assistant designed to interact through users’ smart glasses. Google claims its latest Gemini AI is 20% faster than the most recent version of ChatGPT.
Dan Ives from Wedbush took a more cautious stance regarding AI Overviews, suggesting in a recent note that while it might eventually support Search monetization, its immediate impact is uncertain. However, he noted that AI is already playing a positive role for Google Cloud, projecting a 27% rise in Cloud revenue compared to the previous year.
Doug Anmuth of J.P. Morgan shared a similarly positive outlook, declaring Google among its top recommended tech stocks, alongside Uber and Amazon, and expressing enthusiasm for the advancements in Generative AI ahead of Alphabet’s second-quarter earnings.
Josh Beck, an analyst at Raymond James, cautioned that while the current sentiment surrounding Google’s AI developments is optimistic, the long-term effects on sales remain to be seen.