Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s recent advancements in artificial intelligence will positively influence its second-quarter earnings. Alphabet, Google’s parent company, is scheduled to release its earnings report on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue forecasts for Google, attributing the anticipated growth to the integration of the Gemini AI platform within Google Cloud and the introduction of AI Overviews in Google Search.
They noted, “We remain optimistic about the expanding AI integrations throughout Google’s ecosystem and believe that a wider deployment of AI Overviews will enhance engagement in the core Search business.” This optimism persists even after a rocky launch of AI Overviews, which faced criticism for producing errors and inaccuracies. The analysts have raised their price target for Google’s stock from $200 to $206.
In April, Google announced a remarkable 60% profit increase for the first quarter, fueled in part by its AI initiatives, which drove its stock price up and increased its market capitalization beyond the $2 trillion mark, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s strong first-quarter results followed the rollout of several new AI products as part of its Gemini AI initiative. During its recent developer event, Google I/O, the company unveiled plans for a universal AI assistant capable of interacting with users through smart glasses. Google also claims its latest version of Gemini AI is 20% faster than the most recent ChatGPT.
While Wedbush’s Dan Ives expressed some caution regarding the potential of AI Overviews, he acknowledged that it could contribute positively to search monetization in the future. He also highlighted that AI is already benefiting Google Cloud, with expectations of a 27% revenue increase in that segment compared to last year.
J.P. Morgan’s Doug Anmuth reinforced the positive outlook, naming Google as a top technology stock alongside Uber and Amazon, and expressed enthusiasm over the progress in generative AI ahead of Alphabet’s upcoming earnings report. However, Raymond James analyst Josh Beck cautioned that, despite the current positive narrative surrounding AI, the long-term impact on Google’s sales remains uncertain.