Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s artificial intelligence initiatives will enhance its earnings report for the second quarter, which is due after the market closes on Tuesday.
Bank of America’s Justin Post and Nitin Bansal have upgraded their revenue projections for Google, highlighting the positive impact of integrating Gemini into Google Cloud and AI Overviews in Google Search on sales performance. They expressed confidence in the potential for AI features to increase engagement within the core Search segment, despite some initial challenges that led to the AI tool generating humorous errors and inaccuracies. Consequently, they adjusted their target price for Google’s stock from $200 to $206.
In April, Google saw a remarkable 60% increase in profits for the first quarter, largely attributable to its AI advancements, propelling its market capitalization beyond the $2 trillion threshold alongside tech giants like Apple, Microsoft, and Nvidia.
This strong performance followed a series of artificial intelligence product launches under the Gemini umbrella, including an innovative universal AI assistant announced at Google I/O, which is designed to operate through smart glasses. Google claims its updated Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives was somewhat cautious about the immediate impact of AI Overviews, he noted that it could support Search monetization in the long run. Ives also indicated that AI is already driving growth in Google Cloud, anticipating a 27% revenue increase in that sector compared to the previous year.
J.P. Morgan analyst Doug Anmuth echoed these optimistic views, identifying Google as one of the firm’s top technology stocks, alongside Uber and Amazon, and expressing enthusiasm for the progress in generative AI as Alphabet prepares for its upcoming earnings announcement. However, Raymond James analyst Josh Beck cautioned that although the current narrative surrounding Google’s AI is positive, the long-term impact on sales remains uncertain.