Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its financial performance in the second quarter. The parent company of Google, Alphabet, is scheduled to release its earnings report on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have updated their revenue outlook for Google, citing the integration of Gemini AI into Google Cloud and the new AI Overviews feature in Google Search as key drivers of increased sales. They expressed optimism about the growth of AI across Google’s services, believing that an expanded rollout of AI overviews will elevate user engagement in the search sector. This positive sentiment follows some early challenges with the AI overviews, which faced criticism for inaccuracies. Post and Bansal have raised their price target for Google’s stock from $200 to $206.
In the first quarter, Google reported a remarkable 60% increase in profits, fueled in part by its AI initiatives. This surge helped elevate the company’s stock price and market capitalization, surpassing $2 trillion and placing it alongside industry giants like Apple, Microsoft, and Nvidia.
During the recent Google I/O developer conference, the company unveiled its latest advancements in AI, including a universal AI assistant capable of interacting through smart glasses. According to Google, its new Gemini AI offering is 20% faster than the latest version of ChatGPT.
Dan Ives from Wedbush expressed a more cautious view on AI Overviews but acknowledged its potential to boost search monetization over time. He noted that AI is already having a positive impact on Google Cloud, forecasting a 27% rise in Cloud revenue compared to last year.
J.P. Morgan analyst Doug Anmuth shared a similarly optimistic perspective, naming Google as one of his firm’s top tech stocks, alongside Uber and Amazon, as anticipation builds for Alphabet’s upcoming earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current outlook for Google’s AI initiatives is favorable, the long-term effects on sales remain uncertain.