Google’s upcoming second-quarter earnings report is expected to shine, driven by the company’s advancements in artificial intelligence, according to analysts from Wedbush, J.P. Morgan, and Bank of America. The parent company, Alphabet, is set to announce its earnings after the market close on Tuesday.
Analysts at Bank of America, Justin Post and Nitin Bansal, have increased their revenue forecasts for Google, citing the positive impact of integrating Gemini into Google Cloud and the AI overviews in Google Search. They noted, “We remain positive on growing AI integrations across Google’s ecosystem and believe the broader rollout of AI overviews will help stimulate greater activity in the core Search business,” despite early challenges during the launch of AI overviews that drew criticism due to errors.
Following a remarkable first-quarter profit increase of 60%, largely attributed to AI enhancements, Google’s stock surged, propelling its market capitalization beyond the $2 trillion mark, placing it alongside Apple, Microsoft, and Nvidia.
The strong performance in the first quarter came in the wake of multiple new AI product launches under the Gemini AI initiative. At the Google I/O developer conference, the company unveiled its vision for a universal AI assistant capable of interacting through smart glasses. Google claims its latest Gemini AI iteration is 20% faster than the latest version of ChatGPT.
Dan Ives from Wedbush expressed a more tempered view on AI Overviews compared to Post and Bansal but acknowledged that it could serve as a long-term benefit for Search monetization. Ives also highlighted that AI is already enhancing Google Cloud, with expectations for a 27% year-over-year increase in revenue from this segment.
J.P. Morgan analyst Doug Anmuth reinforced the optimistic outlook and listed Google as one of the firm’s top technology stock picks, along with Uber and Amazon, stating that his team is “encouraged by GenAI progress” ahead of the earnings announcement.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding Google’s AI is positive, the long-term effects on sales remain uncertain.