Analysts from Wedbush, J.P. Morgan, and Bank of America believe that advancements in artificial intelligence (AI) may significantly enhance Google’s upcoming second-quarter earnings, with Alphabet set to disclose the results after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, highlighting the positive impact of integrating the Gemini platform into Google Cloud and AI Overviews in Google Search on sales. They expressed optimism by stating, “We remain positive on growing AI integrations across Google’s ecosystem and think a broader rollout of AI overviews will help drive higher activity in the core Search business.” This positive outlook comes despite some initial challenges with the AI Overviews, which entertained the public with minor mistakes during its rollout. They have also adjusted their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, attributing much of its success to AI. This impressive performance led to a jump in Google’s stock price, pushing its market valuation beyond the $2 trillion mark, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
The company’s optimistic first-quarter results followed the launch of multiple AI products as part of its Gemini AI strategy. Exciting announcements at the Google I/O developer conference included a futuristic universal AI assistant that can interact through smart glasses. Google champions Gemini AI as being 20% faster than the latest ChatGPT.
While Wedbush’s Dan Ives expressed more caution regarding AI Overviews compared to his counterparts, he noted that it could eventually support monetization in Google Search. He also pointed out that AI is already positively impacting Google Cloud revenue, predicting a 27% increase from the previous year.
J.P. Morgan’s Doug Anmuth reinforced this positive analysis by including Google among its top tech stock recommendations alongside Uber and Amazon, highlighting their excitement about the progress in generative AI ahead of Alphabet’s earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current AI enthusiasm surrounding Google is promising, it remains uncertain whether these developments will lead to long-term sales growth.
In summary, the prevailing sentiment among analysts is optimistic as they anticipate that AI advancements will contribute positively to Google’s financial outcomes. As the tech landscape continues to evolve, Google’s continued innovation in AI may play a crucial role in its sustained growth and profitability. This reflects broader industry trends towards embracing AI technologies, suggesting a promising future for companies investing heavily in this space.