Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s AI advancements will enhance its second-quarter earnings, with Alphabet scheduled to announce its earnings on Tuesday after market close.
Bank of America analysts Justin Post and Nitin Bansal have updated their revenue forecasts for Google, highlighting the positive impact of integrating the Gemini platform into Google Cloud and the AI Overviews feature in Google Search. In their recent research note, they expressed optimism about the growing integration of AI within Google’s ecosystem, believing that a broader rollout of AI Overviews will lead to increased activity in the core Search business. This comes despite earlier technical issues where the AI tool faced criticism for inaccuracies. Post and Bansal have increased their price target for Google’s stock from $200 to $206.
In April, Google reported an impressive 60% increase in profits for the first quarter, aided by AI innovations, which drove its stock price up and allowed its market capitalization to surpass $2 trillion, placing it alongside industry giants like Apple, Microsoft, and Nvidia.
Google’s strong first quarter followed numerous launches of new AI technologies, especially its Gemini AI lineup. At its recent developer conference, Google I/O, it unveiled a futuristic universal AI assistant capable of interacting through smart glasses. The company claims its latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious stance on AI Overviews compared to Post and Bansal, he noted it could be beneficial for Search monetization in the future. He also indicated that AI is positively affecting Google Cloud, with the expectation of a 27% revenue increase for the Cloud segment compared to last year.
Doug Anmuth from J.P. Morgan shared a similarly optimistic view, designating Google as one of their top technology stock picks, alongside Uber and Amazon, and showing enthusiasm for the advancements in generative AI ahead of the company’s earnings report.
However, Raymond James analyst Josh Beck cautioned that while Google’s current narrative around AI appears positive, the long-term effects on sales remain uncertain.