Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings, with parent company Alphabet set to announce results after the market closes on Tuesday.
Following a partnership with Uber for delivery services, Darden Restaurants’ stock has seen a notable increase. Bank of America analysts Justin Post and Nitin Bansal have revised their revenue expectations for Google upwards. They attribute this to the integration of the Gemini AI into Google Cloud and AI Overviews in Search, which they believe will enhance sales.
In a recent research note, they expressed optimism about the ongoing adoption of AI within Google’s ecosystem and suggested that a wider implementation of AI Overviews could lead to increased activity in Google’s core Search operations, despite initial shortcomings that were met with some humor online. Consequently, they 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, driven in part by its AI initiatives, resulting in a spike in its stock price and pushing its market capitalization beyond the $2 trillion threshold, joining the ranks of Apple, Microsoft, and Nvidia.
This strong first-quarter performance came on the heels of several AI product launches associated with Google’s Gemini offerings. Among the latest announcements at the Google I/O developer conference was a universal AI assistant capable of interacting through users’ smart glasses. Google claims its newest iteration of Gemini AI operates 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed a somewhat cautious stance on the AI Overviews compared to his colleagues, he acknowledged the potential long-term benefits for Search monetization. He also noted that AI is already having a positive effect on Google Cloud, predicting a 27% increase in Cloud revenue year-over-year.
J.P. Morgan’s Doug Anmuth shared a positive outlook and highlighted Google as one of the firm’s top tech stock picks, alongside Uber and Amazon, indicating excitement about the progress in Generative AI ahead of Alphabet’s second-quarter earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding Google’s AI is favorable, it remains uncertain whether these advancements will translate into long-term sales growth.