Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google is poised for a strong second-quarter earnings report, with the company set to release its results after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have raised their revenue expectations for Google, citing the integration of its Gemini AI technology into Google Cloud and enhancements in Google Search as key factors that will drive sales growth. They remain optimistic about the company’s increasing use of AI across its services, despite some initial challenges with the rollout of AI overviews, which faced criticism for generating errors. Following these insights, they have adjusted their price target for Google shares from $200 to $206.
In its April report, Google announced a remarkable 60% increase in profits for the first quarter, largely attributed to its AI initiatives. This surge contributed to a significant rise in its stock price, elevating the company’s market capitalization beyond the $2 trillion mark, placing it alongside competitors like Apple, Microsoft, and Nvidia.
Google’s impressive first-quarter performance came on the heels of numerous product launches under its Gemini AI line. One of the notable announcements during the Google I/O developer conference was a vision for a universal AI assistant capable of interacting with users through smart glasses. Google claims that its latest Gemini AI is 20% faster than the newest version of ChatGPT.
While Wedbush’s Dan Ives expressed caution regarding the immediate impact of AI Overviews, he noted that this feature could eventually support monetization of Search. He also highlighted that AI advancements are already benefiting Google Cloud, with expectations of a 27% revenue increase in that segment year-over-year.
J.P. Morgan’s Doug Anmuth shared the optimism, including Google in the firm’s list of top tech stock picks, along with Uber and Amazon. He expressed encouragement regarding Google’s progress with GenAI ahead of the upcoming earnings announcement.
However, Raymond James analyst Josh Beck issued a note of caution, stating that while the current AI developments are beneficial for Google, the long-term impact on sales remains uncertain.