Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google is poised for a favorable second-quarter earnings report, which is set to be released after market hours on Tuesday. They have raised their revenue forecasts for the tech giant, highlighting the positive impact of its AI initiatives.
Bank of America analysts Justin Post and Nitin Bansal believe that the incorporation of Gemini into Google Cloud and enhanced AI Overviews in Google Search will contribute to increased sales. Their research note at the end of last week emphasized their optimism regarding the growing integration of AI across Google’s ecosystem and its potential to drive higher activity in the core Search business, despite initial challenges when the AI tools faced criticism for errors. They have adjusted their price target for Google’s stock, raising it from $200 to $206.
In April, Google reported an impressive 60% profit increase in the first quarter, credited in part to its AI advancements, which propelled its stock price and increased its market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The company’s strong performance was bolstered by the rollout of new AI products under its Gemini AI offerings, unveiled during the Google I/O conference. These included a future universal AI assistant capable of interacting through smart glasses, with claims that its latest Gemini AI is 20% faster than the newest iteration of ChatGPT.
While Wedbush analyst Dan Ives expressed cautious optimism about the potential of AI Overviews, he noted that it could eventually support Search monetization. He also observed that AI is already having a positive impact on Google Cloud, with expectations of a 27% increase in Cloud revenue year-over-year.
J.P. Morgan analyst Doug Anmuth echoed this optimistic outlook, recently naming Google as one of the firm’s top tech stock picks alongside Uber and Amazon, citing progress in generative AI ahead of Alphabet’s earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding Google’s AI is positive, the long-term impact of AI on the company’s sales remains uncertain.