Analysts at Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its second-quarter earnings, with the company set to announce its financial results after market close on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue forecasts for Google, citing the company’s integration of its Gemini AI into Google Cloud and AI Overviews in Search as key factors in expected sales growth.
They stated, “We remain positive on the growing AI integrations across Google’s ecosystem and believe that a broader rollout of AI overviews will drive increased activity in the core Search business.” This comes despite a rocky start for AI Overviews, which faced ridicule online due to various errors and inaccuracies. They raised Google’s stock price target from $200 to $206.
In April, Google announced a remarkable 60% increase in profits for the first quarter, largely attributed to AI, leading to a surge in its stock price and pushing its market capitalization above $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s strong performance in the first quarter followed a series of new AI product releases under its Gemini AI initiative. Among the recent launches at Google I/O was an innovative AI assistant designed to interact through smart glasses. Google claims its latest Gemini AI model is 20% faster than the current version of ChatGPT.
While Wedbush analyst Dan Ives had a more cautious view of AI Overviews compared to Post and Bansal, he noted that it could contribute positively to Search monetization in the long run. Ives highlighted that AI is already enhancing Google’s Cloud services, and like other Wall Street analysts, he anticipates a 27% increase in Cloud revenue compared to the previous year.
J.P. Morgan analyst Doug Anmuth mirrored this optimism, naming Google as one of his firm’s top technology stocks, alongside Uber and Amazon, stating that he and his team are “encouraged by GenAI progress” in advance of Alphabet’s earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current AI narrative surrounding Google is favorable, the long-term impact of AI on the company’s sales remains uncertain.