Analysts from Wedbush, J.P. Morgan, and Bank of America believe that Google’s advancements in artificial intelligence will enhance its second-quarter earnings. Alphabet, Google’s parent company, will release its earnings report after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, attributing potential growth to the integration of its Gemini AI into Google Cloud and AI Overviews in search results. They expressed optimism in a recent research note, stating that these AI enhancements could lead to increased activity in Google’s core Search business, despite some challenges faced during the initial rollout of AI Overviews. As a result, they raised their price target for Google’s stock from $200 to $206.
In April, Google announced a significant 60% increase in profits for the first quarter, driven in part by its AI initiatives, leading to a surge in the company’s stock price and pushing its market capitalization beyond $2 trillion to join the ranks of Apple, Microsoft, and Nvidia.
The company’s strong performance is attributed to multiple AI product launches under its Gemini offerings, including the introduction of a universal AI assistant capable of interacting with users through smart glasses. Google has stated that its latest Gemini AI is 20% more efficient than the latest ChatGPT model.
While Wedbush’s Dan Ives expressed a more cautious view on the potential of AI Overviews, he acknowledged that they could contribute positively to Search monetization over time. Ives noted that AI is already having a beneficial impact on Google Cloud, with expectations of a 27% revenue increase in this segment from the previous year.
J.P. Morgan’s Doug Anmuth also shared a positive outlook, naming Google among its top tech stock picks alongside Uber and Amazon, highlighting enthusiasm for the company’s progress in generative AI ahead of the second-quarter earnings report. Conversely, Raymond James analyst Josh Beck cautioned that, while the current AI narrative appears favorable for Google, the long-term impact on sales remains uncertain.