Analysts from Wedbush, J.P. Morgan, and Bank of America have forecast a positive outlook for Alphabet, Google’s parent company, ahead of its second-quarter earnings report scheduled for after the market closes on Tuesday. They attribute this optimism to the company’s advancements in artificial intelligence.
Bank of America’s Justin Post and Nitin Bansal have boosted their revenue projections for Google, citing the integration of the Gemini AI into Google Cloud and enhanced AI Overviews in Google Search as key drivers for increased sales. They expressed confidence in these AI advancements, asserting they would significantly stimulate activity within the core Search business, despite some initial challenges with the AI tool that led to online ridicule due to inaccuracies. Consequently, they have raised their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase for the first quarter, largely due to its AI developments, which also propelled its stock price and market capitalization past the $2 trillion mark, positioning it alongside tech giants Apple, Microsoft, and Nvidia.
Following months of unveiling new AI products, including a notable universal AI assistant at its recent Google I/O developer conference, Google has introduced its latest Gemini AI, which it claims is 20% faster than the current version of ChatGPT.
While Wedbush’s Dan Ives is slightly more reserved in his enthusiasm for AI Overviews compared to fellow analysts, he noted that it could eventually support Search monetization. He also highlighted that AI is already having a positive impact on Google Cloud, projecting a 27% revenue increase in that segment year-over-year.
J.P. Morgan’s Doug Anmuth similarly highlighted Google as one of their top tech investment picks, along with Uber and Amazon, expressing optimism about the advancements in generative AI in anticipation of Alphabet’s earnings report.
However, Raymond James analyst Josh Beck cautioned that although the current sentiment surrounding Google’s AI initiatives is positive, it remains uncertain whether these developments will lead to sustained long-term growth in sales.