Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic that Google’s advancements in artificial intelligence will contribute positively to its second-quarter earnings. Alphabet, Google’s parent company, is scheduled to release its earnings report on Tuesday.
Following a partnership between Uber and Darden Restaurants, shares of Darden saw a significant increase. Bank of America analysts, Justin Post and Nitin Bansal, have raised their revenue projections for Google, citing the integration of Gemini into Google Cloud and the use of AI Overviews in Google Search as key factors in anticipated sales growth.
The analysts expressed optimism in their lengthy report, stating, “We remain positive on growing AI integrations across Google’s ecosystem and think a broader rollout of AI Overviews will help drive higher activity in the core Search business.” This comes despite a rocky start for the AI Overviews tool, which faced criticism for various inaccuracies. As a result of their analysis, Post and Bansal increased their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% rise in profits for the first quarter, largely attributed to its AI capabilities. This surge led to a substantial increase in the company’s stock price, pushing its market capitalization to over $2 trillion, joining the ranks of other tech giants like Apple, Microsoft, and Nvidia.
Google’s positive first-quarter results followed a series of new AI product launches tied to its Gemini AI offerings. Highlights from the Google I/O conference included a futuristic universal AI assistant capable of interacting through users’ smart glasses. Google claims its latest Gemini AI development is 20% faster than the latest ChatGPT.
While Wedbush analyst Dan Ives was somewhat cautious about AI Overviews compared to Post and Bansal, he noted that these features could potentially enhance revenue from Google Search in the long term. He also mentioned that AI’s influence is already evident in Google Cloud, predicting a 27% revenue increase from the previous year.
J.P. Morgan analyst Doug Anmuth shared a similar positive outlook, naming Google one of the firm’s top tech stock picks alongside Uber and Amazon. He expressed optimism about the advancements in generative AI ahead of Alphabet’s upcoming earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding AI at Google is favorable, it remains uncertain whether AI will lead to sustained long-term sales growth for the company.