Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google will experience significant growth in its second-quarter earnings, aided by advancements in artificial intelligence. Alphabet, the parent company of Google, is scheduled to announce its earnings on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue forecasts for Google, citing the integration of the Gemini AI platform into Google Cloud and Search as key factors expected to drive sales. They expressed optimism about how the wider implementation of AI tools could enhance activity within Google’s core Search operations, despite initial challenges the AI Overviews tool faced during its rollout. As a result of their analysis, they have adjusted their price target for Google shares from $200 to $206.
In its first quarter, Google reported a striking 60% rise in profits, largely attributed to AI advancements. This remarkable performance contributed to a surge in its stock price, elevating the company’s market capitalization beyond $2 trillion, joining the ranks of tech giants like Apple, Microsoft, and Nvidia.
Google’s promising results followed a series of announcements regarding new AI products, particularly during its recent developer conference, Google I/O. Among these launches was a universal AI assistant designed to interact through smart glasses. Google claims its recent Gemini AI iteration is currently 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives remains less enthusiastic about AI Overviews compared to his counterparts, he believes that it could eventually benefit Search monetization. He also notes that AI is already having a positive impact on Google Cloud, predicting a 27% rise in Cloud revenue compared to last year.
J.P. Morgan analyst Doug Anmuth shared a similar positive outlook, identifying Google as one of his firm’s top tech stock picks alongside Uber and Amazon, and expressing optimism about the company’s Generative AI developments leading up to the earnings report.
However, Raymond James analyst Josh Beck cautioned that while the AI narrative surrounding Google is favorable, it remains uncertain whether these advancements will result in a sustained increase in sales over the long term.