Analysts from Wedbush, J.P. Morgan, and Bank of America expect Google’s upcoming second-quarter earnings to be positively impacted by the company’s advancements in artificial intelligence. Alphabet, Google’s parent company, is scheduled to release its earnings report on Tuesday.
Following a partnership with Uber for delivery services, shares of Darden Restaurants have seen a notable increase. Analysts from both Bank of America and Wedbush have adjusted their revenue forecasts for Google upwards. Justin Post and Nitin Bansal from Bank of America attribute this optimistic outlook to the integration of Google’s AI initiatives, specifically Gemini, into Google Cloud and enhanced AI features in Google Search, predicting increased sales.
They expressed confidence that the broader implementation of AI capabilities within Google’s ecosystem will stimulate more activity in its core Search business, despite earlier challenges faced during the initial rollout of AI features, which garnered some online ridicule for errors. As a result, they have raised their stock price target for Google from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, significantly aided by AI advancements. This led to a surge in the company’s stock price and pushed its market capitalization above $2 trillion, placing it alongside tech giants Apple, Microsoft, and Nvidia.
The positive first-quarter results followed the launch of several new AI products as part of Google’s Gemini offerings. Notable innovations showcased at the Google I/O developer conference included a future universal AI assistant capable of visually and verbally interacting through smart glasses. Google claims its latest Gemini AI is 20% faster than the latest ChatGPT.
While Wedbush analyst Dan Ives maintains a more cautious stance on the immediate impact of AI Overviews, he acknowledges their potential for future benefits in Search monetization. Furthermore, he believes that AI is already enhancing Google Cloud’s performance, aligning with the broader analyst consensus predicting a 27% year-over-year revenue increase in this sector.
Doug Anmuth from J.P. Morgan also shared a positive outlook, identifying Google among the firm’s top technology stock picks, alongside Uber and Amazon, and expressing optimism about progress in generative AI ahead of Alphabet’s earnings announcement.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding Google’s AI prospects appears favorable, it is still uncertain whether these developments will result in sustained long-term sales growth.