Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its financial performance for the second quarter. Alphabet, Google’s parent company, is expected to release its earnings report after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue projections for Google, citing the integration of the Gemini AI into Google Cloud and the AI Overviews in Google Search as significant contributors to sales growth. They expressed optimism about the company’s expanding AI applications and believe that a wider deployment of AI overviews could lead to increased engagement in Google’s core Search segment. They adjusted their price target for Google’s stock from $200 to $206, despite some initial challenges with the rollout of AI Overviews, which garnered attention for errors and inaccuracies.
In April, Google reported a remarkable 60% profit increase in the first quarter, driven in part by its AI initiatives, which caused its stock price to surge and helped elevate its market capitalization beyond the $2 trillion threshold, joining the ranks of Apple, Microsoft, and Nvidia.
The strong first-quarter results followed several new AI product launches tied to Google’s Gemini AI strategy. At its recent Google I/O conference, the company unveiled a future AI assistant capable of interacting through smart glasses. Google claims its latest Gemini AI is operating at a speed 20% faster than the latest version of ChatGPT.
While Dan Ives of Wedbush expressed some skepticism regarding the AI Overviews, noting that it may take time for them to positively impact Search monetization, he acknowledged that AI is already benefiting Google Cloud. Ives, along with his peers, expects a 27% year-over-year increase in Cloud revenue.
J.P. Morgan’s Doug Anmuth also voiced support for Google, naming it among the firm’s top technology stock picks, including Uber and Amazon, and highlighted the promising developments in generative AI as the company approaches its second-quarter earnings announcement.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding Google’s AI is positive, it remains uncertain whether these advancements will lead to sustained long-term sales growth for the company.