Analysts from Wedbush, J.P. Morgan, and Bank of America are predicting that Google’s advancements in artificial intelligence will significantly enhance its performance in the second quarter earnings report due Tuesday. Alphabet, Google’s parent company, is anticipated to reveal its earnings later in the day.
Bank of America analysts, Justin Post and Nitin Bansal, have increased their revenue forecasts for Google, attributing potential sales boosts to the integration of the Gemini AI into Google Cloud and AI Overviews in Google Search. They expressed optimism about the impact of AI technology on Google’s core search business, despite initial setbacks with the AI Overviews feature. Due to these developments, they have raised their price target for Google’s stock from $200 to $206.
In its first quarter earnings report in April, Google reported a remarkable 60% rise in profits, driven partly by its AI initiatives, which resulted in the company’s stock price skyrocketing and its market capitalization exceeding $2 trillion, placing it among tech giants like Apple, Microsoft, and Nvidia.
This stellar performance followed a series of AI product launches under the Gemini AI line, including ambitious features showcased during the Google I/O developer conference, such as a universal AI assistant designed to interact via smart glasses. Google claims its latest AI technology is 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives is not as optimistic about the immediate impact of AI Overviews as his counterparts, he noted that it could contribute positively to search monetization in the long run. He also highlighted that AI is already enhancing Google Cloud, expecting a 27% year-over-year revenue growth for that segment.
J.P. Morgan analyst Doug Anmuth shared a similar positive outlook, naming Google among the firm’s top tech stock recommendations alongside Uber and Amazon, citing encouraging developments in Generative AI ahead of the upcoming earnings announcement.
However, Raymond James analyst Josh Beck cautioned that, while the current sentiment surrounding Google’s AI is optimistic, the long-term impact on sales remains uncertain.