Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s upcoming second-quarter earnings, predicting a favorable impact from the company’s AI initiatives. Alphabet, Google’s parent company, is scheduled to release its earnings report after the market closes on Tuesday.
Due to a new delivery partnership with Uber, shares of Darden Restaurants have seen significant gains. Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, highlighting the integration of the Gemini AI into Google Cloud and AI Overviews in Google Search as key drivers for increased sales.
In their research note published at the end of last week, the analysts expressed confidence in the expanding role of AI within Google’s ecosystem, believing that a wider implementation of AI overviews could enhance activity in its primary Search business, despite initial challenges during the rollout that attracted online criticism. They also raised their stock price target for Google from $200 to $206.
Following a remarkable 60% profit increase in the first quarter, attributed in part to AI advancements, Google’s stock price surged, pushing its market value past $2 trillion, alongside tech giants Apple, Microsoft, and Nvidia.
The company’s thriving first quarter was bolstered by numerous AI product launches under its Gemini initiative. Recent announcements at the Google I/O developer conference included a cutting-edge AI assistant designed to operate through smart glasses and claims of the new Gemini AI being 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious outlook regarding the AI Overviews compared to Post and Bansal, he still indicated potential long-term benefits for search monetization. He noted that AI technologies are already enhancing Google Cloud’s performance and predicted a 27% year-over-year growth in Cloud revenue.
Doug Anmuth from J.P. Morgan echoed the optimistic views and highlighted Google as one of their top tech stock picks, along with Uber and Amazon, citing promising advancements in generative AI ahead of the anticipated earnings report.
However, Raymond James analyst Josh Beck cautioned that although the current AI narrative is positive, it remains uncertain whether it will lead to sustained sales growth for Google in the long run.