Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate a boost in Alphabet’s second-quarter earnings, largely attributed to Google’s developments in artificial intelligence. The company is expected to announce its earnings results following the market close on Tuesday.
Amid significant market fluctuations, Nvidia’s stock is experiencing one of its most challenging weeks. Bank of America’s analysts, Justin Post and Nitin Bansal, have improved their revenue expectations for Google, citing enhancements from the integration of Gemini into Google Cloud and AI Overviews in Google Search, which are predicted to contribute to increased sales.
In their recent research note, Post and Bansal expressed optimism about the growing integration of AI within Google’s ecosystem, forecasting that an expanded deployment of AI Overviews could lead to more user engagement in the core Search business. They adjusted their price target for Google’s stock from $200 to $206, despite some early missteps during the rollout of AI Overviews, which had drawn ridicule online for errors and inaccuracies.
Google had previously reported a remarkable 60% rise in profits in the first quarter, bolstered by AI advancements, which led to a surge in its stock price and pushed its market value beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The first quarter’s success followed several months of new AI product launches, notably during Google I/O, where the company unveiled a universal AI assistant capable of interacting through smart glasses. Google also claims that its latest Gemini AI is 20% faster than the current version of ChatGPT.
Dan Ives from Wedbush expressed a more cautious stance on AI Overviews, suggesting that while it may not have immediate impact, it could eventually support Search monetization. He also noted that AI is already having a positive effect on Google Cloud, projecting a 27% increase in Cloud revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth joined the optimistic outlook, designating Google as one of their top tech stock picks alongside Uber and Amazon, highlighting excitement over the progress of generative AI leading up to the earnings report.
Conversely, Josh Beck from Raymond James cautioned that, while the current perspective on Google’s AI initiatives is encouraging, the long-term effects on sales remain uncertain.