Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate strong earnings for Google parent company Alphabet in the upcoming second quarter. The company is scheduled to announce its earnings report on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, attributing this positive outlook to the integration of its Gemini AI into Google Cloud and improvements in AI features within Google Search. They expressed confidence that the broader application of AI tools will enhance user engagement in Search, despite challenges faced during the initial rollout of AI overviews, which were met with criticism online for inaccuracies. Consequently, they adjusted their price target for Google’s stock from $200 to $206.
In its first quarter, Google reported an impressive profit increase of 60%, largely fueled by advancements in AI, leading to a surge in its stock price and propelling its market capitalization beyond the $2 trillion mark, joining the ranks of tech giants like Apple, Microsoft, and Nvidia.
Following months of launching new AI products under its Gemini framework, Google’s recent announcements at the Google I/O developer conference introduced a sophisticated AI assistant capable of operating through smart glasses. Google asserts that its new Gemini AI is 20% quicker than the latest version of ChatGPT.
Despite a more cautious stance on AI Overviews from Wedbush’s Dan Ives, who acknowledges potential benefits for Search monetization in the long term, he noted that AI is currently positively impacting Google Cloud. He, alongside other Wall Street analysts, predicts a 27% increase in Cloud revenue compared to last year.
J.P. Morgan analyst Doug Anmuth has also expressed optimism about Google’s prospects, listing it among the top tech stocks, alongside Uber and Amazon, and commending the progress in generative AI ahead of Alphabet’s earnings report. On a more cautious note, Raymond James analyst Josh Beck highlighted that while the current AI developments for Google appear promising, the long-term impact on sales remains uncertain.
In summary, while there are varied opinions on the long-term effects of AI on Google’s sales, the current momentum suggests a robust performance which could bode well for investors and the tech giant’s future. As Google continues to innovate and enhance its AI capabilities, there is a strong belief that these advancements will foster growth and profitability in the ongoing digital era, paving the way for transformative applications and user experiences.