Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings. Alphabet, Google’s parent company, is scheduled to release its earnings report after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue forecasts for Google, attributing the expected growth to the integration of Gemini into Google Cloud and AI Overviews in Google Search. They expressed optimism about the increasing presence of AI across Google’s platform, which they believe will enhance user activity in the Search segment. Despite some initial challenges with the AI Overviews—which faced criticism for inaccuracies—Post and Bansal raised their price target for Google’s stock from $200 to $206.
In its first quarter, Google reported a remarkable 60% increase in profits, largely driven by its AI initiatives, leading to a surge in its stock price and a market capitalization exceeding $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Throughout the months leading to its earnings report, Google introduced several new AI products as part of its Gemini offerings, including an innovative universal AI assistant capable of functioning through smart glasses. The company claims its latest Gemini AI is 20% faster than the latest ChatGPT.
While Dan Ives from Wedbush is more cautious regarding the impact of AI Overviews, he believes they may eventually benefit Search monetization. He also noted that AI is already positively influencing Google Cloud, anticipating a 27% year-over-year increase in revenue from this segment.
J.P. Morgan analyst Doug Anmuth also expressed optimism, naming Google among its top technology stock picks alongside Uber and Amazon. He mentioned being encouraged by the progress in generative AI as the firm approaches Alphabet’s second-quarter earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current sentiment around Google’s AI efforts is positive, it remains uncertain whether these advancements will sustain long-term sales growth for the company.