Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings report. Alphabet, Google’s parent company, is scheduled to announce its earnings on Tuesday after the market closes.
Following a partnership with Uber for delivery services, Darden Restaurants’ stock has seen significant gains. Bank of America analysts Justin Post and Nitin Bansal have increased their revenue projections for Google, citing the integration of Google’s Gemini AI into its Cloud services and AI Overviews in Google Search as key contributing factors to higher sales. They believe that these AI advancements will enhance user activity, despite initial challenges encountered during the rollout of AI Overviews, which had some humorous blunders reported on social media. The analysts have adjusted their price target for Google stocks from $200 to $206.
In April, Google posted a remarkable 60% increase in profits for the first quarter, much of which can be attributed to AI advancements. This strong performance led to a surge in its stock price, elevating the company’s market capitalization beyond $2 trillion, joining other tech giants like Apple, Microsoft, and Nvidia.
Google’s positive first-quarter results followed several months of releasing new AI products within its Gemini AI framework. Highlights from the recent Google I/O developer conference included a universal AI assistant designed to interact through smart glasses. Google claims that its latest Gemini AI performs 20% faster than the most recent version of ChatGPT.
While Wedbush’s Dan Ives expressed some caution regarding AI Overviews, suggesting that their impact on Search monetization might be gradual, he noted that AI is already enhancing Google Cloud services. Many analysts, including Ives, anticipate a 27% revenue increase for Google Cloud compared to last year.
J.P. Morgan’s Doug Anmuth shared a similarly optimistic outlook, naming Google, along with Uber and Amazon, among its top tech stock picks, citing progress in generative AI leading up to Alphabet’s earnings report. On a cautionary note, Raymond James analyst Josh Beck remarked that, despite the current positive narrative surrounding AI’s impact, the long-term effects on Google’s sales remain uncertain.