Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings report, scheduled for release after the market closes on Tuesday.
Both Bank of America and Wedbush have updated their revenue forecasts for Google, with Bank of America’s Justin Post and Nitin Bansal highlighting the integration of the Gemini AI into Google Cloud and the AI Overviews in Google Search as key sales drivers. They expressed optimism about the increased activity in Google’s core Search business, despite initial challenges and public mockery of the AI Overviews due to errors. As a result, they have adjusted their price target for Google’s stock from $200 to $206.
In April, Google reported an impressive 60% rise in profits for the first quarter, significantly fueled by its AI innovations, which subsequently drove its stock price upward and pushed its market capitalization beyond $2 trillion, alongside tech giants like Apple, Microsoft, and Nvidia.
The company maintained a positive trajectory following the unveiling of its Gemini AI products, including an anticipated universal AI assistant that could operate through smart glasses. Google boasts that its Gemini AI operates 20% faster than the latest version of ChatGPT.
While Dan Ives from Wedbush demonstrated a more cautious stance regarding the AI Overviews, he acknowledged that they could contribute to Search monetization over time. Ives also suggested that AI has already started benefiting Google Cloud, projecting a 27% revenue increase in that sector compared to the previous year.
Doug Anmuth from J.P. Morgan shared an optimistic view, listing Google among the firm’s top technology stocks in anticipation of Alphabet’s second-quarter earnings, praising the progress made in generative AI.
However, analyst Josh Beck from Raymond James cautioned that, despite the current positive outlook related to AI, the long-term impact on Google’s sales remains uncertain.