Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Alphabet, Google’s parent company, potentially reporting impressive earnings for the second quarter. The earnings announcement is expected after market close on Tuesday. This positive outlook is influenced by Google’s recent advancements in artificial intelligence (AI), particularly the integration of its Gemini AI into both Google Cloud and search functions.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, highlighting that AI tools, particularly the AI overviews feature, are expected to enhance activity in the core search business. They acknowledged some challenges during the initial launch of AI overviews, which faced criticism for errors and inaccuracies but remained confident in its long-term potential. Consequently, they raised their projection for Google’s stock price from $200 to $206.
In the first quarter, Google experienced a remarkable 60% surge in profits, largely attributed to AI advancements, pushing its market capitalization beyond $2 trillion. The company has unveiled numerous AI products recently, including innovations showcased at its Google I/O conference, like a next-generation universal AI assistant capable of interacting through smart glasses. Google’s latest Gemini AI is claimed to be 20% faster than the current version of ChatGPT.
While Dan Ives of Wedbush expressed some caution regarding the immediate impact of AI Overviews, he acknowledged its potential to contribute positively to search monetization over time. He also noted that AI is already enhancing Google Cloud, predicting a 27% increase in its revenue compared to last year.
J.P. Morgan’s Doug Anmuth echoed this optimism, naming Google among their top technology stocks, alongside Uber and Amazon, as they observe encouraging developments in generative AI (GenAI) ahead of the earnings report. However, Raymond James’ Josh Beck advised caution, emphasizing uncertainty over the long-term impact of AI on Google’s sales.
Overall, the analysts’ perspectives hint at a bright future for Google as it continues to leverage AI across its services, which could lead to sustained growth and innovation. With the tech giant making significant strides in this space, it may continue to enhance its position in a rapidly evolving digital landscape.