Analysts from Wedbush, J.P. Morgan, and Bank of America have expressed optimism that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings. The parent company, Alphabet, is scheduled to announce its earnings on Tuesday.
According to analysts Justin Post and Nitin Bansal from Bank of America, the integration of Gemini into Google Cloud and the introduction of AI Overviews in Google Search are expected to enhance sales. They have increased their revenue outlook for Google and raised the stock price target from $200 to $206.
In its first-quarter report in April, Google experienced a remarkable profit increase of 60% partly driven by AI innovations, which helped elevate its market capitalization beyond $2 trillion, placing it alongside Apple, Microsoft, and Nvidia.
Google’s impressive performance in the first quarter followed the launch of various AI products under its Gemini AI branding. Noteworthy announcements made during the Google I/O developer conference included plans for a universal AI assistant capable of communicating through smart glasses. Google claims that its latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed a bit of caution regarding AI Overviews, noting that they may eventually benefit Search monetization, he acknowledged that AI is already having a positive effect on Google Cloud. Like his peers, he anticipates a 27% year-over-year increase in Cloud revenue.
J.P. Morgan’s Doug Anmuth shared a similar positive outlook, designating Google as one of their top tech stock picks alongside Uber and Amazon, and expressing enthusiasm for the progress in Generative AI ahead of Alphabet’s upcoming earnings report. However, analyst Josh Beck from Raymond James cautioned that while the current AI narrative appears promising, the long-term effects on Google’s sales remain uncertain.