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. Alphabet, Google’s parent company, is scheduled to announce its earnings on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have adjusted their revenue projections for Google upward, citing the integration of Gemini into Google Cloud and the implementation of AI overviews in Google Search as key factors driving sales. Their research notes express confidence in the growing AI features throughout Google’s ecosystem and anticipate that a wider rollout of AI overviews will enhance activity within the core Search business. Despite some early challenges and missteps from the AI overview tool, they have increased their price target for Google’s stock from $200 to $206.
Earlier this year, Google reported a 60% profit increase in the first quarter, largely attributed to its AI initiatives, which propelled its stock price and pushed its market capitalization over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The company’s strong first-quarter results followed a series of new AI product launches under its Gemini brand. During the Google I/O developer conference, Google introduced a futuristic AI assistant capable of visual and verbal interactions through smart glasses, boasting that its latest Gemini AI is 20% faster than the newest version of ChatGPT.
While Dan Ives from Wedbush is more cautious regarding the impact of AI Overviews than his counterparts, he noted that they could eventually benefit Search monetization. He also stated that AI is already contributing to growth in Google Cloud, forecasting a 27% revenue increase from last year, a sentiment echoed by other analysts.
J.P. Morgan analyst Doug Anmuth recognized Google as one of the firm’s top technology stock picks alongside Uber and Amazon, expressing optimism about the progress of its generative AI ahead of Alphabet’s earnings report. However, Raymond James analyst Josh Beck cautioned that the sustainability of AI’s impact on Google’s long-term sales remains uncertain.