Analysts from Wedbush, J.P. Morgan, and Bank of America are projecting a strong second-quarter earnings report for Google, driven by advancements in artificial intelligence. Alphabet, Google’s parent company, is slated to share its earnings results after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, citing the benefits of integrating AI features, like the Gemini AI, into Google Cloud and Search. They expressed optimism about the potential of AI Overviews to enhance activity in Google’s core Search business, even acknowledging some initial issues during the rollout. They have adjusted their price target for Google’s stock from $200 to $206.
In April, Google reported a staggering 60% rise in profits for the first quarter, significantly attributed to AI developments. This performance propelled its stock price upward, pushing its market capitalization beyond $2 trillion, joining tech giants like Apple, Microsoft, and Nvidia.
Google’s strong first-quarter performance came on the heels of numerous AI product launches, including a futuristic AI assistant revealed at the Google I/O developer conference, which the company claims is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious outlook on AI Overviews, suggesting they might benefit Search monetization over time, he highlighted that AI is already positively impacting Google Cloud. He forecasts a 27% increase in Cloud revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth echoed the upbeat sentiment, listing Google as one of his firm’s top tech stock picks alongside Uber and Amazon, focusing on the progress with generative AI in anticipation of Alphabet’s earnings report.
However, Raymond James analyst Josh Beck cautioned that despite the current positive narrative around AI for Google, the long-term impact on sales remains to be seen.