Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its second-quarter earnings. Alphabet, Google’s parent company, is expected to announce its earnings on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, attributing it to the integration of AI tools like Gemini into Google Cloud and enhanced AI features in Google Search. They expressed optimism in a recent research note, stating that the broader implementation of AI tools is anticipated to drive increased activity in the Search sector despite initial challenges where the AI tool faced criticism for inaccuracies. Post and Bansal revised their price target for Google stock from $200 to $206.
In April, Google reported a dramatic 60% profit increase for the first quarter, significantly aided by its AI initiatives, which led to the company’s stock climbing and its market capitalization surpassing $2 trillion, joining tech giants like Apple, Microsoft, and Nvidia.
The strong performance for Google in the first quarter followed several new AI product launches as part of its Gemini offerings. At the Google I/O developer conference, the company unveiled a new universal AI assistant that can interact through smart glasses. Google claims its latest Gemini AI is 20% faster than the most recent version of ChatGPT.
While Wedbush analyst Dan Ives is not as optimistic about AI Overviews as his peers, he acknowledged in a recent report that it could positively impact Search monetization in the long run. He noted that AI is already providing a boost to Google Cloud, with expectations that Cloud revenue will increase by 27% compared to the previous year.
J.P. Morgan analyst Doug Anmuth also voiced confidence in Google, ranking it among the top tech stocks for investment alongside Uber and Amazon, highlighting progress in generative AI in anticipation of Alphabet’s upcoming earnings report. Conversely, Raymond James analyst Josh Beck cautioned that, although the current AI narrative for Google appears favorable, the long-term impact on sales remains uncertain.