Analysts from Wedbush, J.P. Morgan, and Bank of America predict 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 following the market close on Tuesday.
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Analysts from Bank of America and Wedbush have raised their revenue forecasts for Google. Specifically, Bank of America’s Justin Post and Nitin Bansal believe that the integration of Gemini—Google’s AI tool—into Google Cloud and the implementation of AI Overviews in Google Search will drive sales growth. They expressed optimism about the potential for these AI integrations to boost activity in the core Search business, despite some initial setbacks that led to humorous online reactions to early AI Overview failures. Their price target for Google’s stock has been increased from $200 to $206.
In April, Google reported a remarkable 60% surge in profits for the first quarter, significantly influenced by its AI initiatives. This led to a substantial rise in its stock price, elevating the company’s market capitalization beyond the $2 trillion milestone, placing it alongside major firms like Apple, Microsoft, and Nvidia.
Google’s successful first-quarter results followed a series of AI product releases aligned with its Gemini AI strategy. Notable announcements at the Google I/O developer conference included a proposed universal AI assistant capable of interacting through smart glasses. Google asserts that its latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious view on AI Overviews compared to his peers, he acknowledged the potential long-term benefits for Search monetization. Ives also noted that AI is already positively impacting Google Cloud, and he anticipates a 27% increase in Cloud revenue compared to last year, similar to other Wall Street analysts’ expectations.
Doug Anmuth from J.P. Morgan shared a favorable outlook, designating Google as one of the top tech stocks, alongside Uber and Amazon, expressing enthusiasm for the advancements in generative AI prior to Alphabet’s earnings announcement. However, Raymond James analyst Josh Beck cautioned that while the current AI developments are encouraging, the long-term impact on Google’s sales remains undetermined.