Analysts from Wedbush, J.P. Morgan, and Bank of America are predicting a positive impact on Alphabet’s second-quarter earnings due to its advancements in artificial intelligence. The parent company of Google is scheduled to announce its earnings after the market closes on Tuesday.
Both Bank of America and Wedbush have increased their revenue projections for Google. Analysts Justin Post and Nitin Bansal believe that the integration of the Gemini AI into Google Cloud and AI Overviews in Google Search will significantly enhance sales. They expressed confidence in the growing AI features across Google’s platforms and suggested that a wider adoption of AI overviews could bolster engagement in the core Search business, despite initial challenges where the tool faced criticism for inaccuracies. They have adjusted their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, attributed in part to its AI initiatives. This surge led to a significant rise in the stock price, elevating the company’s market value to over $2 trillion, joining tech giants like Apple, Microsoft, and Nvidia.
Google’s impressive results followed several months of launching new AI products, including notable updates announced at its developer conference, Google I/O. These included advancements aimed at creating a universal AI assistant capable of interacting through smart glasses. Google has touted its newest Gemini AI as being 20% quicker than the latest version of ChatGPT.
While Dan Ives from Wedbush maintained a cautious outlook on AI Overviews compared to his peers, he acknowledged its potential to eventually aid in Search monetization. He also noted that AI is already having a positive effect on Google Cloud, anticipating a 27% increase in Cloud revenue year-over-year.
J.P. Morgan’s Doug Anmuth shared an optimistic view, identifying Google as one of the firm’s top technology stock picks, alongside Uber and Amazon, as they highlighted encouraging progress with generative AI ahead of Alphabet’s earnings report.
However, Raymond James analyst Josh Beck cautioned that although the current narrative around Google’s AI appears favorable, the long-term effects on sales remain uncertain.