Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s (Alphabet) upcoming second-quarter earnings, predicting a boost largely fueled by the company’s advancements in artificial intelligence (AI). The tech giant is scheduled to announce its earnings following the market close on Tuesday.
Both Bank of America’s Justin Post and Nitin Bansal have raised their revenue forecasts for Google based on the successful incorporation of Gemini, an innovative AI tool, into Google Cloud and the enhanced AI Overviews feature in Google Search. They expressed confidence in the positive impact these developments will have on sales, emphasizing that broader adoption of AI technologies could invigorate activity within Google’s core Search business. Despite some initial challenges with the AI Overviews tool, which faced criticism for producing errors, their growth projections led them to increase Google’s stock price target from $200 to $206.
In the previous quarter, Google reported an impressive 60% increase in profits, primarily attributed to its AI initiatives, causing its stock price to surge and elevating its market capitalization to over $2 trillion—a milestone that places it alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s first-quarter success followed a series of product launches around its Gemini AI offerings, including ambitious developments showcased at the recent Google I/O conference. Among these innovations is a universal AI assistant capable of interacting through smart glasses, which Google asserts is significantly more efficient than competing technologies like ChatGPT.
While Wedbush analyst Dan Ives is somewhat cautious regarding the immediate impact of AI Overviews, he acknowledged their potential to enhance Search monetization over time. He also observed that AI technologies are already making a substantial impact on Google Cloud, with expectations of a 27% revenue increase from last year.
J.P. Morgan’s Doug Anmuth reinforced this optimistic outlook, ranking Google among their top tech stock picks, alongside Uber and Amazon, citing encouraging developments in generative AI ahead of the earnings report. However, analyst Josh Beck from Raymond James cautioned that although the current sentiment surrounding Google’s AI initiatives is positive, the sustainability of these sales increases over the long term remains uncertain.
As Google continues to innovate and integrate AI across its platforms, there is a strong sense of anticipation for the company’s earnings report. The positive forecast from numerous analysts highlights a potential era of growth for Google, reflecting the increasing importance of AI in the technology sector. This momentum presents a hopeful outlook for the company’s future as it navigates the expanding landscape of artificial intelligence.