Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Alphabet’s upcoming second-quarter earnings report, which is expected to reveal the positive impact of the company’s artificial intelligence (AI) initiatives. Google, the parent company of Alphabet, is scheduled to announce its earnings after market hours on Tuesday.
Bank of America analysts, including Justin Post and Nitin Bansal, have raised their revenue forecasts for Google in light of recent advances in AI technology. They believe that the integration of Gemini into Google Cloud and improved AI features in Google Search will enhance sales momentum. Their research note expresses confidence in the AI-driven enhancements to the search function, even in the face of some initial challenges during the rollout of AI features.
Earlier this year, Google experienced a remarkable 60% profit increase in the first quarter, largely attributed to its AI developments, which drove its stock price up and allowed the company to achieve a market valuation exceeding $2 trillion alongside tech giants like Apple, Microsoft, and Nvidia.
Since the launch of its Gemini AI offerings, Google has unveiled several innovative products, including a futuristic AI assistant capable of interacting with users through smart glasses. Google claims that the new Gemini AI operates 20% faster than its closest competitor, ChatGPT.
While Wedbush analyst Dan Ives expressed cautious optimism regarding the long-term benefits of AI Overviews for search monetization, he recognized that Google Cloud is already benefiting from AI advancements. Ives, along with others in the financial sector, anticipates a 27% increase in cloud revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth also expressed positive sentiments and classified Google among the top tech stocks, alongside Uber and Amazon. The firm’s enthusiasm stems from the perceived progress in generative AI as Alphabet approaches its second-quarter earnings announcement.
However, Raymond James analyst Josh Beck cautioned that although the current narrative surrounding Google’s AI is promising, the long-term effect on sales remains uncertain.
In summary, while there are mixed views on the long-term effects of AI on Google’s sales, the overall sentiment points toward a strong performance in the upcoming earnings report, driven by innovative AI solutions and positive market reactions. This development underscores the transformative potential of AI technologies in enhancing business performance, which could herald an optimistic future for both Google and the tech industry at large.