Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s ventures in artificial intelligence will enhance its financial performance for the second quarter, with the company set to release its earnings report on Tuesday after the market closes.
Bank of America’s Justin Post and Nitin Bansal have updated their revenue forecasts for Google, highlighting the positive impact of integrating the Gemini AI technology into Google Cloud and the AI Overviews feature in Google Search. They expressed optimism for increased sales as these AI tools become more broadly available, despite some initial challenges during the rollout phase. Post and Bansal have raised their price target for Google’s stock from $200 to $206.
In April, Google experienced a remarkable 60% increase in profits for the first quarter, largely attributed to the successful introduction of AI technologies. This impressive performance caused Google’s stock to climb, elevating its market value to over $2 trillion, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s positive first-quarter results came on the heels of an extensive launch of new AI products under its Gemini brand. At the recent Google I/O developer conference, the company unveiled an advanced AI assistant capable of operating through users’ smart glasses. Google claims its latest Gemini iteration is 20% faster than the current version of ChatGPT.
While Wedbush’s Dan Ives expressed some skepticism about AI Overviews, he acknowledged that they could eventually help with Search monetization. He also noted that AI has already positively impacted Google Cloud, forecasting a 27% increase in Cloud revenue compared to the previous year.
Doug Anmuth from J.P. Morgan shared similar optimistic views, designating Google as one of their top technology stock picks alongside Uber and Amazon, and indicating confidence in the advancements of GenAI ahead of Alphabet’s earnings announcement. However, Raymond James analyst Josh Beck cautioned that while the current AI narrative for Google is favorable, the long-term effects of AI on sales remain uncertain.