Analysts from Wedbush, J.P. Morgan, and Bank of America believe Google’s advancements in artificial intelligence are likely to enhance its earnings for the second quarter. Alphabet, Google’s parent company, is scheduled to release its earnings report after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, attributing this boost to the integration of the Gemini AI platform into Google Cloud and the AI Overviews feature in Google Search. They expressed optimism about the anticipated rollout of these AI integrations, predicting they will drive increased activity within the core Search business, despite challenges faced during the initial introduction of AI Overviews.
Following a robust first-quarter report in April, where profits surged by 60% thanks to AI initiatives, Google’s stock value soared, propelling the company’s market capitalization beyond $2 trillion, placing it alongside industry giants like Apple, Microsoft, and Nvidia. Notable product launches, particularly during the Google I/O developer conference, showcased advancements such as a universal AI assistant designed for smart glasses, with Google claiming its latest Gemini AI is significantly faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives is less optimistic about the immediate impact of AI Overviews than other analysts, he noted the potential long-term benefits for Search monetization. He also acknowledged that AI is already contributing positively to Google Cloud, anticipating a 27% revenue growth in that segment compared to the previous year.
J.P. Morgan analyst Doug Anmuth recently categorized Google as one of the firm’s top technology stocks, alongside Uber and Amazon, highlighting the encouraging developments in generative AI ahead of Alphabet’s earnings announcement. Conversely, Raymond James analyst Josh Beck cautioned that while the current sentiment regarding AI’s influence on Google is optimistic, the long-term implications for sales growth remain uncertain.