Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s artificial intelligence initiatives will contribute positively to its second-quarter earnings report, which is scheduled for release after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have raised their revenue forecasts for Google, citing the integration of Gemini into Google Cloud and the introduction of AI Overviews in Google Search as key factors for increased sales. They expressed optimism about the growth of AI across Google’s ecosystem, believing that a wider deployment of AI Overviews will enhance activity within Google’s core Search business. Despite some early challenges and criticisms regarding the accuracy of AI Overviews, they raised their price target for Google’s stock from $200 to $206.
In its previous earnings report, Google revealed a remarkable 60% increase in profits for the first quarter, driven in part by its AI developments, which propelled its market capitalization past $2 trillion, joining the ranks of tech giants like Apple, Microsoft, and Nvidia.
In addition to previous AI enhancements, Google announced new AI offerings during its developer conference, Google I/O, including a universal AI assistant designed to operate through smart glasses. The company claims its latest Gemini AI is now 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives was more cautious about the long-term impact of AI Overviews compared to Post and Bansal, he noted that AI advancements could eventually support Search monetization. He also highlighted that AI is already influencing Google Cloud’s performance, with expectations of a 27% revenue increase in this area compared to last year.
J.P. Morgan’s Doug Anmuth joined the chorus of positive feedback, designating Google as one of its top tech stock picks alongside Uber and Amazon, and expressed encouragement regarding the progress in generative AI ahead of Alphabet’s earnings announcement.
Raymond James analyst Josh Beck cautioned that while the current narrative around AI at Google is favorable, its long-term impact on sales remains uncertain.