Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will enhance its second-quarter earnings. The parent company, Alphabet, is scheduled to release its earnings after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, attributing the uptick to the integration of Gemini into Google Cloud and AI Overviews in Google Search. They expressed confidence, stating that the wider application of AI overviews would stimulate increased activity in Google’s core Search operations, despite some initial challenges that led to humorously flawed outputs from the AI tool. Consequently, they revised their price target for Google’s stock from $200 to $206.
In its April earnings report, Google announced a staggering 60% increase in profits for the first quarter, largely credited to AI advancements. This resulted in a surge in the company’s stock price and pushed its market capitalization above $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s robust first-quarter results followed a series of new artificial intelligence product launches as part of its Gemini initiative. At the recent Google I/O developer conference, the company unveiled an advanced AI assistant capable of interacting through smart glasses. Google claims its latest Gemini AI is 20% faster than the most current version of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious stance on AI Overviews compared to Post and Bansal, he noted in a recent report that it could potentially support search monetization in the long run. He also highlighted the existing impact of AI on Google Cloud, predicting a 27% growth in Cloud revenue year-over-year.
J.P. Morgan analyst Doug Anmuth shared an optimistic viewpoint, naming Google as one of the firm’s top tech stock picks, alongside Uber and Amazon, citing encouraging developments in generative AI leading up to Alphabet’s forthcoming earnings announcement.
However, Raymond James analyst Josh Beck cautioned that, although the current outlook for Google’s AI initiatives is positive, the long-term impact of AI on boosting sales remains uncertain.