Analysts from Wedbush, J.P. Morgan, and Bank of America predict that advancements in artificial intelligence will enhance Google’s second-quarter earnings, as the company prepares to announce its results after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have revised their revenue forecasts for Google, highlighting the integration of the Gemini AI into Google Cloud and AI Overviews in Google Search as key contributors to increased sales. They expressed optimism about AI’s role across Google’s ecosystem, emphasizing that a wider implementation of AI Overviews is likely to stimulate greater activity in the core Search business, despite some initial setbacks when the tool faced criticism for inaccuracies. They have adjusted their stock price target for Google from $200 to $206.
Earlier this year, Google reported a remarkable 60% increase in profits for the first quarter, attributed in part to AI advancements, which propelled its stock price and market capitalization beyond $2 trillion, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
The company has launched several new AI offerings under its Gemini umbrella, including a visionary universal AI assistant presented at the Google I/O developer conference, designed to interact through smart glasses. Google asserts that the latest iteration of its Gemini AI operates 20% faster than ChatGPT.
While Wedbush analyst Dan Ives expressed caution regarding the long-term impact of AI Overviews, he acknowledged that these features could eventually aid in Search monetization. He also noted that AI technology is already benefiting Google Cloud, estimating a 27% year-over-year revenue growth for the division.
J.P. Morgan’s Doug Anmuth also shared a positive outlook for Google, designating it as one of the firm’s top tech stock picks along with Uber and Amazon, and expressing enthusiasm about progress in generative AI ahead of Alphabet’s upcoming earnings report. However, Raymond James analyst Josh Beck cautioned that, despite the current upbeat AI narrative, the long-term effects of AI on Google’s sales remain uncertain.