Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively impact its earnings for the second quarter, as the company prepares to release its financial results after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have recently upgraded their revenue forecasts for Google, citing the successful integration of the Gemini AI technology into Google Cloud and AI Overviews in Google Search as factors that will likely boost sales. They expressed optimism about the growing influence of AI across Google’s services and suggested that the wider introduction of AI overviews could enhance activity within the core Search business, even amidst some early challenges with the rollout of these features. They have raised their price target for Google stock from $200 to $206.
In April, Google reported a remarkable 60% rise in profits for the first quarter, significantly aided by its AI initiatives, which drove its stock price upward and elevated its market capitalization to over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
This impressive financial performance followed several new AI product launches as part of Google’s Gemini offerings. During its recent developer conference, Google showcased a prototype for a universal AI assistant capable of interacting through smart glasses, boasting that Gemini AI operates 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed some reservations about the immediate impact of AI Overviews on revenue, he noted that it could eventually support Search monetization. However, he highlighted that AI is already providing a boost to Google Cloud, with expectations of a 27% revenue increase from the previous year.
J.P. Morgan’s Doug Anmuth shared a similar optimistic outlook, designating Google as one of his firm’s top tech stock picks, alongside Uber and Amazon, and expressing enthusiasm for the progress made in generative AI ahead of Alphabet’s quarterly results.
On the other hand, Raymond James analyst Josh Beck cautioned that while the current narrative around Google’s AI is favorable, the long-term impact of AI on Google’s sales remains uncertain.