Google’s recent advancements in artificial intelligence are poised to enhance its earnings report for the second quarter, according to analysts from Wedbush, J.P. Morgan, and Bank of America. The parent company, Alphabet, is scheduled to release its earnings results after the market closes on Tuesday.
Analysts from Bank of America and Wedbush have increased their revenue forecasts for Google. They believe that the integration of the Gemini AI platform into Google Cloud and the new AI Overviews in Google Search will significantly boost sales. In a recent research note, Bank of America’s Justin Post and Nitin Bansal expressed optimism about the growing integration of AI across Google’s services, suggesting that a wider deployment of AI Overviews could enhance activity in the core Search business, despite some initial challenges when the tool faced criticism for errors and inaccuracies. They have adjusted their stock price target for Google from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, driven in part by its AI innovations. This surge led to a notable rise in its stock price, elevating its market capitalization to over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The company’s strong first-quarter performance followed the rollout of various AI products as part of its Gemini AI initiative. Notable announcements at the Google I/O developer conference included a universal AI assistant capable of interacting through smart glasses. Google claims the latest iteration of Gemini AI is 20% faster than the recent ChatGPT.
While Wedbush’s Dan Ives is somewhat cautious about the AI Overviews’ potential, stating it may aid Search monetization over time, he acknowledges that AI is already driving growth in Google Cloud. Similar to other analysts, he anticipates a 27% increase in Cloud revenue compared to the previous year.
J.P. Morgan analyst Doug Anmuth also shared an optimistic outlook, listing Google among the firm’s top tech stock recommendations, alongside Uber and Amazon, and highlighting the encouraging developments in generative AI ahead of Alphabet’s earnings report.
However, Raymond James analyst Josh Beck cautioned that, despite the current positive sentiment surrounding AI at Google, the long-term impact on sales remains uncertain.