According to analysts from Wedbush, J.P. Morgan, and Bank of America, Google’s artificial intelligence initiatives are expected to positively impact its second-quarter earnings. The parent company of Google, Alphabet, is scheduled to announce its earnings after the market closes on Tuesday.
Nvidia is experiencing one of its most challenging weeks. Amidst this turmoil, Bank of America and Wedbush have increased their revenue forecasts for Google. Analysts Justin Post and Nitin Bansal of Bank of America believe that the integration of Gemini into Google Cloud and AI features in Google Search will enhance revenue.
They noted in a research report that they remain optimistic about the expanding AI integrations within Google’s ecosystem, stating that a wider implementation of AI features will likely result in increased activity in the core Search business. This optimism persists even though the initial rollout of AI features faced some criticism due to inaccuracies. Consequently, they have adjusted their price target for Google stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, attributed in part to its AI efforts. This led to a surge in its stock price, elevating the company’s market valuation above $2 trillion, joining other tech giants like Apple, Microsoft, and Nvidia.
Google’s strong first-quarter results followed several months of new AI product launches as part of its Gemini AI suite. At the recent Google I/O developer conference, Google unveiled a universal AI assistant capable of interacting through smart glasses, claiming their latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives was more cautious about the impact of AI features than Post and Bansal, he suggested that these developments could eventually benefit Search monetization. He also noted that AI is already playing a significant role in boosting Google Cloud revenues, with expectations of a 27% increase from last year.
Doug Anmuth of J.P. Morgan shared a similar optimistic outlook, identifying Google as one of the firm’s top technology stock picks alongside Uber and Amazon. He expressed enthusiasm regarding the advancements in generative AI ahead of Alphabet’s earnings announcement.
However, Josh Beck from Raymond James cautioned that while the current AI narrative for Google appears favorable, the long-term impact of AI on actual sales remains uncertain.