Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively influence its second-quarter earnings, with parent company Alphabet set to disclose earnings on Tuesday after market close.
Both Bank of America and Wedbush have revised their revenue forecasts for Google. Analysts Justin Post and Nitin Bansal from Bank of America highlight the integration of the Gemini AI tool into Google Cloud and AI Overviews in Google Search as key factors that will enhance sales.
In a recent research note, they expressed optimism about AI implementations across Google’s ecosystem, noting that a wider rollout of AI overviews is expected to drive increased activity in the core Search business. This came despite some early challenges during the rollout of AI overviews, which drew ridicule online due to inaccuracies. Following this, Post and Bansal have adjusted their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% rise in first-quarter profits, significantly attributed to its AI innovations. This impressive performance resulted in a surge in the stock price, elevating the company’s market capitalization to over $2 trillion, placing it alongside tech giants such as Apple, Microsoft, and Nvidia.
The company has introduced several new AI products as part of its Gemini offerings, notably unveiling a universal AI assistant during its Google I/O developer conference, capable of visual and verbal interactions through smart glasses. Google asserts that its latest Gemini AI is 20% faster than the latest ChatGPT version.
While Wedbush’s Dan Ives expressed more caution regarding the AI Overviews compared to Post and Bansal, he noted that it “might evolve into a support for Search monetization over the long term.” He added that AI is already having a positive effect on Google Cloud, predicting a 27% increase in Cloud revenue year-over-year.
J.P. Morgan’s Doug Anmuth shared a similar optimistic outlook, naming Google among the firm’s top technology stocks, alongside Uber and Amazon, while expressing encouragement regarding advancements in Generative AI prior to Alphabet’s earnings announcement.
However, Raymond James analyst Josh Beck cautioned that while the current outlook on AI for Google is optimistic, its long-term impact on boosting sales remains uncertain.