Analysts from Wedbush, J.P. Morgan, and Bank of America suggest that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings. The parent company, Alphabet, is scheduled to disclose its earnings on Tuesday evening.
Bank of America’s analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, attributing the expected sales boost to the integration of the Gemini AI platform into Google Cloud and the introduction of AI Overviews in Google Search. They expressed optimism about ongoing AI developments within Google’s ecosystem, anticipating that the wider implementation of AI Overviews will enhance activity in the core Search business, despite some initial issues that attracted online criticism for producing errors. They have lifted their stock price target for Google from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, largely credited to AI advancements. This surge in profits led to a significant rise in its stock price, pushing the company’s market capitalization above $2 trillion, joining the ranks of tech giants such as Apple, Microsoft, and Nvidia.
Google’s successful first-quarter results followed a series of new AI product launches under its Gemini AI brand. During the recent Google I/O developer conference, the company unveiled a next-generation universal AI assistant designed to operate through smart glasses. Google claims that the latest iteration of its Gemini AI is 20% faster than the most recent version of ChatGPT.
Dan Ives from Wedbush expressed a more cautious outlook on AI Overviews compared to his counterparts at Bank of America but indicated that it could eventually support Search monetization. He noted that AI is already having a positive impact on Google Cloud, predicting a 27% year-over-year increase in Cloud revenue.
J.P. Morgan analyst Doug Anmuth shared a similarly optimistic view, naming Google as one of the firm’s leading tech stock picks alongside Uber and Amazon. He emphasized his confidence in the progress of generative AI ahead of Alphabet’s impending earnings report. However, analyst Josh Beck from Raymond James cautioned that while the prevailing narrative surrounding Google’s AI is encouraging, the long-term effects on sales remain uncertain.