Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will enhance its earnings in the second quarter, as Alphabet, Google’s parent company, prepares to release its financial results on Tuesday.
Bank of America’s Justin Post and Nitin Bansal have revised their revenue forecasts for Google, citing the integration of its Gemini platform into Google Cloud and AI Overviews in Search as factors likely to drive sales growth. In a recent research note, they expressed optimism about the increasing integration of AI across Google’s services, believing that a wider implementation of AI overviews will enhance user engagement in the Search segment, despite some initial challenges during its rollout that attracted social media humor for inaccuracies. They have adjusted their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, significantly fueled by its AI initiatives. This strong performance resulted in a surge in the company’s stock price, elevating its market capitalization beyond the $2 trillion threshold, joining the ranks of Apple, Microsoft, and Nvidia.
The company’s robust first-quarter results followed a series of AI product releases under its Gemini offerings. Noteworthy announcements from the recent Google I/O developer conference included an advanced universal AI assistant capable of interacting through smart glasses. Google claims its updated Gemini AI is 20% faster than the latest ChatGPT model.
While Wedbush’s Dan Ives expressed a more cautious view on the immediate impact of AI Overviews compared to Post and Bansal, he noted that it could eventually support Search monetization. He further emphasized that AI is already benefiting Google Cloud, predicting a year-over-year increase of 27% in its revenue, a sentiment shared by other Wall Street analysts.
J.P. Morgan analyst Doug Anmuth also highlighted positive trends, listing Google among his firm’s top technology stocks, alongside Uber and Amazon, and expressing optimism about the progress in Generative AI ahead of Alphabet’s quarterly earnings announcement.
Conversely, Raymond James analyst Josh Beck cautioned that despite the current positive narrative surrounding AI at Google, the long-term impact on sales remains to be seen.