Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s artificial intelligence developments will positively influence its second-quarter earnings report, which is expected after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, attributing the potential sales boost to the integration of Gemini into Google Cloud and the introduction of AI Overviews in Google Search. They expressed optimism about the impact of AI advancements across Google’s platform, indicating that a wider implementation of AI Overviews could enhance activity in the Search segment. Despite some initial challenges, including public criticism of the AI tool due to inaccuracies, they upgraded Google’s stock price target from $200 to $206.
In April, Google reported a remarkable 60% profit increase in its first quarter, driven in part by AI innovations, which propelled the company’s market capitalization over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia. The strong performance followed extensive releases of new AI products within the Gemini AI framework, highlighted at the Google I/O developer conference, where the company introduced an advanced AI assistant designed to interact through smart glasses.
While Wedbush analyst Dan Ives expressed a tempered outlook for AI Overviews compared to his colleagues, he noted that these tools could eventually support Search monetization. He also pointed out that AI advancements are already benefiting Google Cloud, with a projected 27% revenue increase year-over-year.
J.P. Morgan analyst Doug Anmuth also shared a positive outlook, identifying Google as one of the firm’s top tech stocks, alongside Uber and Amazon, due to advancements in generative AI ahead of Alphabet’s earnings report. However, Raymond James analyst Josh Beck cautioned that while the current AI narrative looks promising, the long-term impact on Google’s sales remains uncertain.