Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will positively impact its earnings in the second quarter. Alphabet, Google’s parent company, is scheduled to announce its earnings report after market close on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have raised their revenue forecasts for Google, noting that the integration of the Gemini AI into Google Cloud and its new AI features in Search could significantly boost sales. They mentioned in a recent research note that the expanding AI capabilities across Google’s platform could enhance user engagement in the core Search business, despite some initial hiccups with the AI features that led to public mockery due to errors. Post and Bansal have increased their stock price target for Google from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, largely attributed to AI advancements. This success was reflected in a rise in its stock price, allowing the company to surpass a market capitalization of $2 trillion, joining tech giants like Apple, Microsoft, and Nvidia.
This impressive performance followed a series of AI product launches under Google’s Gemini initiative. Notably, at the Google I/O developer conference, the company introduced a future AI assistant capable of interacting through smart glasses, claiming its latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives was somewhat cautious about the impact of AI features in Search, he indicated that these developments could eventually aid in monetization. Ives also noted that AI is already having a positive effect on Google Cloud, estimating a 27% revenue growth in that segment compared to the previous year.
J.P. Morgan’s Doug Anmuth shared the optimistic outlook, ranking Google among the top technology stocks, alongside Uber and Amazon, and expressing enthusiasm about the advancements in generative AI ahead of Alphabet’s earnings report. However, Raymond James analyst Josh Beck cautioned that although the current sentiment regarding AI at Google is favorable, the long-term impact on the company’s sales remains uncertain.