According to analysts from Wedbush, J.P. Morgan, and Bank of America, Google’s artificial intelligence advancements are likely to enhance its second-quarter earnings. The parent company, Alphabet, is expected to release its earnings report on Tuesday evening.
Both Bank of America and Wedbush analysts have increased their revenue forecasts for Google. Analysts Justin Post and Nitin Bansal from Bank of America believe that the integration of Gemini into Google Cloud and AI Overviews in Google Search will significantly boost sales. They stated in a recent research note that they remain optimistic about the growing AI integrations within Google’s ecosystem. They anticipate that a wider rollout of AI overviews will stimulate higher activity in the core Search business, despite some initial challenges with the tool that faced ridicule online for errors and inaccuracies. They have raised their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, aided by its AI developments. This impressive financial performance led to a rise in its stock price, pushing the company’s market capitalization beyond the $2 trillion mark, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s successful first-quarter results came on the back of its series of new AI product launches, particularly its Gemini AI features. At the Google I/O developer conference, it unveiled a future universal AI assistant capable of visual interaction through smart glasses. Google has claimed that its latest Gemini AI is 20% faster than the most recent version of ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious outlook on AI Overviews compared to Post and Bansal, he noted that it could eventually support Search monetization over time. Ives also remarked that AI is already positively impacting Google Cloud, and, like many Wall Street experts, expects a 27% increase in Cloud revenue year-over-year.
Doug Anmuth from J.P. Morgan shared similar positive views, naming Google as one of the top tech stocks alongside Uber and Amazon, expressing optimism regarding the progress of generative AI (GenAI) ahead of Alphabet’s second-quarter earnings announcement.
Raymond James analyst Josh Beck cautioned that although the current narrative surrounding AI for Google is favorable, it remains uncertain whether AI will lead to long-term sales growth for the company.