Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will boost its second-quarter earnings. Alphabet, Google’s parent company, is expected to announce its earnings after the market closes on Tuesday.
The analysts from Bank of America, Justin Post and Nitin Bansal, have increased their revenue forecasts for Google, citing that the integration of the Gemini AI into Google Cloud and AI Overviews within Google Search is likely to enhance sales. They expressed a positive outlook, 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.” Their revised price target for Google shares rose from $200 to $206.
In April, Google reported a remarkable 60% profit increase for the first quarter, attributed in part to AI developments. This surge contributed to a spike in its stock price, elevating its market capitalization beyond the $2 trillion milestone, joining the ranks of Apple, Microsoft, and Nvidia.
The strong performance in the first quarter followed a series of new AI product launches under the Gemini AI initiative. At the recent Google I/O developer conference, the company showcased a universal AI assistant capable of interacting through smart glasses. Google claims its latest Gemini AI is 20% faster than the latest ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious stance on AI Overviews compared to Post and Bansal, he noted that it could become a beneficial factor for Search monetization over time. He also mentioned that AI is already contributing positively to Google Cloud, forecasting a 27% increase in Cloud revenue year-over-year.
Doug Anmuth from J.P. Morgan echoed the optimistic sentiment, identifying Google as one of the firm’s top tech stocks along with Uber and Amazon. He conveyed enthusiasm about the advancements in generative AI ahead of Alphabet’s forthcoming earnings report.
However, Raymond James analyst Josh Beck issued a note of caution, stating that while the current perception of Google’s AI capabilities is favorable, the long-term impact of AI on Google’s sales remains uncertain.