Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s AI advancements will positively impact its second-quarter earnings. Alphabet, Google’s parent company, is set to release its earnings report after the market closes on Tuesday.
Both Bank of America and Wedbush analysts have increased their revenue projections for Google. Bank of America’s Justin Post and Nitin Bansal believe the integration of Gemini into Google Cloud and AI Overviews in Google Search will help boost sales. They remain optimistic about the growing AI integrations within Google’s ecosystem, despite some initial issues with AI overviews that led to online criticism. As a result, Post and Bansal have raised their stock price outlook for Google from $200 to $206.
In April, Google reported a 60% profit increase in the first quarter, partly due to its AI developments. This led to a surge in its stock price, elevating the company’s market valuation to over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The positive first-quarter performance came after several new AI product launches under its Gemini AI suite. At its recent developer conference, Google I/O, the company unveiled an advanced AI assistant capable of interacting through smart glasses. Google claims its latest Gemini AI is 20% faster than the newest version of ChatGPT.
Dan Ives from Wedbush expressed cautious optimism, noting that AI Overviews might eventually enhance search monetization. He also pointed out that AI is already benefiting Google Cloud, projecting a 27% increase in Cloud revenue compared to the previous year.
Doug Anmuth from J.P. Morgan also shared a positive outlook, recently naming Google one of the investment firm’s top tech stocks alongside Uber and Amazon. He expressed confidence in Google’s progress with GenAI ahead of the second-quarter earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current AI narrative for Google is favorable, the long-term impact of AI on Google’s sales remains to be seen.