Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its second-quarter earnings, with Alphabet scheduled to announce its earnings report after Tuesday’s market close.
Bank of America analysts Justin Post and Nitin Bansal have adjusted their revenue forecasts for Google, citing the integration of the Gemini AI platform into Google Cloud and AI Overviews in Google Search as key factors that will drive sales growth. They expressed optimism about the potential of AI integrations within Google’s services, believing that the widespread implementation of AI Overviews could lead to increased activity in its core Search business. Despite some challenges during the initial rollout, which sparked social media jokes due to inaccuracies, they have raised their price target for Google stock from $200 to $206.
In its first quarter, Google reported a remarkable 60% profit increase, largely attributed to its AI initiatives, which resulted in a significant jump in its stock price and elevated its market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
After months of launching new AI products as part of its Gemini offerings, Google’s positive first-quarter results preceded the introduction of a universal AI assistant that can interact with users via smart glasses. The latest iteration of Gemini AI is claimed to be 20% quicker than ChatGPT.
Although Wedbush’s Dan Ives expressed a more cautious stance regarding AI Overviews, he noted it could provide support for Search monetization in the future. He also observed that AI is positively impacting Google Cloud, projecting a 27% year-over-year revenue growth for that segment.
J.P. Morgan’s Doug Anmuth echoed this optimism, naming Google among the top tech stocks alongside Uber and Amazon, citing encouraging progress in generative AI ahead of the company’s earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current outlook for Google’s AI initiatives appears strong, the long-term impact on sales remains uncertain.