Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s upcoming second-quarter earnings, attributing this positivity to the company’s advancements in artificial intelligence. Alphabet, Google’s parent company, is scheduled to announce its earnings on Tuesday after the market closes.
Bank of America analysts Justin Post and Nitin Bansal have adjusted their revenue predictions for Google upward, highlighting the integration of Gemini AI into Google Cloud and enhanced AI Overviews in Google Search as significant factors for increased sales. They expressed confidence that the broader deployment of AI features would lead to greater user engagement with the core Search business, despite some initial challenges and criticisms surrounding the AI Overviews.
Google had previously reported a remarkable 60% profit surge in the first quarter, partly due to its AI initiatives. This performance substantially boosted its stock price and market capitalization to over $2 trillion, placing it among the tech giants like Apple, Microsoft, and Nvidia.
The company has steadily rolled out new AI products as part of its Gemini offerings, with one of the latest features presented at the Google I/O developer conference being a universal AI assistant capable of visual and verbal communication through smart glasses. Google claims its Gemini AI operates 20% faster than the latest version of ChatGPT.
While Wedbush’s analyst Dan Ives expressed a more cautious view on the immediate impact of AI Overviews, he recognized the potential for these features to support Search monetization over time. He also noted the positive effect of AI on Google Cloud, predicting a 27% revenue increase for the Cloud segment compared to the previous year.
J.P. Morgan analyst Doug Anmuth also expressed optimism, naming Google as one of the top tech stocks, alongside Uber and Amazon, commending the progress in generative AI prior to the earnings report. Meanwhile, Raymond James analyst Josh Beck cautioned that the long-term effects of AI on Google’s sales remain uncertain despite the current positive sentiment surrounding its AI initiatives.