Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its earnings report for the second quarter, set to be released after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have revised their revenue expectations for Google, highlighting the potential benefits of integrating the Gemini AI into both Google Cloud and Google Search. They express optimism that a broader implementation of AI overviews will stimulate increased activity in Google’s core Search business. Despite some setbacks during the initial launch of AI overviews, which garnered social media attention for inaccuracies, they have raised their price target for Google’s stock from $200 to $206.
In April, Google announced a remarkable 60% increase in profits for the first quarter, partly attributable to its AI initiatives. This success led to a surge in stock prices, elevating the company’s market capitalization to over $2 trillion, placing it alongside industry giants like Apple, Microsoft, and Nvidia.
Google’s positive quarterly performance followed a series of new AI product launches as part of its Gemini AI initiative. Recent announcements from the Google I/O developer conference included a next-generation AI assistant capable of visual interactions through smart glasses. Google claims that its latest Gemini AI model is 20% faster than the newest version of ChatGPT.
While Wedbush’s Dan Ives expressed some caution regarding the impact of AI Overviews, he remains confident that AI will contribute to increasing Google Cloud revenue, projecting a 27% rise compared to the previous year. J.P. Morgan’s Doug Anmuth also voiced a favorable outlook, identifying Google as a top technology stock, alongside Uber and Amazon, and expressing enthusiasm for the progress in generative AI ahead of Alphabet’s earnings report.
However, Raymond James analyst Josh Beck cautioned that, despite the current positive AI narrative for Google, the long-term impact on sales remains uncertain.