Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s upcoming second-quarter earnings, anticipating a positive impact from the company’s developments in artificial intelligence. Alphabet, Google’s parent company, is scheduled to release its earnings report after the market closes on Tuesday.
In light of Google’s integration of its Gemini AI technology into Google Cloud and the introduction of AI Overviews in Google Search, Bank of America analysts Justin Post and Nitin Bansal have raised their revenue forecasts for the company. They believe that the wider implementation of AI features will stimulate more user engagement in Google’s core search operations. Despite early challenges with the AI Overviews, which faced criticism for inaccuracies, the analysts have adjusted their price target for Google’s stock from $200 to $206.
In April, Google announced a remarkable 60% rise in profits for the first quarter, driven significantly by its AI initiatives, leading to a surge in its stock price and exceeding a market valuation of $2 trillion, alongside tech giants like Apple, Microsoft, and Nvidia.
Following an active release schedule of new AI products as part of its Gemini AI suite, Google showcased additional advancements at its recent developer conference, including a futuristic AI assistant capable of interacting through smart glasses and claiming that its latest Gemini AI operates 20% faster than ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious view regarding the AI Overviews, he still recognized the potential for these tools to positively impact search monetization over time. He noted that AI technologies are already enhancing Google Cloud, with expectations of a 27% revenue growth in that sector compared to the previous year.
J.P. Morgan analyst Doug Anmuth echoed this positive outlook, ranking Google among the firm’s top tech stock picks, alongside Uber and Amazon, and expressing optimism about the advancements in generative AI preceding Alphabet’s earnings announcement. However, Raymond James analyst Josh Beck cautioned that while the narrative surrounding Google’s AI efforts remains favorable, it remains uncertain whether these developments will translate into sustained long-term sales growth.