Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic that Google’s advancements in artificial intelligence will enhance its second-quarter earnings. 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 forecasts for Google, citing the integration of Gemini AI into Google Cloud and the introduction of AI Overviews in Google Search as factors that will likely boost sales. In a research note, they expressed confidence that the broader rollout of AI features will stimulate higher engagement in the core Search business, despite early challenges that included minor errors and humorous internet reactions to AI Overviews. As a result, they raised their price target for Google’s stock from $200 to $206.
Google reported a remarkable 60% profit increase in the first quarter of this year, significantly aided by its AI developments, leading to a surge in its stock price and pushing its market capitalization past $2 trillion. This places Google in an elite group alongside Apple, Microsoft, and Nvidia.
Following several months of AI product launches, including notable features announced at the Google I/O developer conference, Google has been making remarkable strides with its Gemini AI, claimed to be 20% faster than the latest version of ChatGPT. While Wedbush’s Dan Ives remains somewhat cautious about the immediate impact of AI Overviews, he believes that AI will continue to positively influence Google Cloud revenue, projecting a 27% year-over-year increase.
Furthermore, Doug Anmuth at J.P. Morgan highlighted Google as one of the firm’s top technology picks, alongside Uber and Amazon, noting optimism about the company’s generative AI advancements ahead of the earnings announcement. However, Raymond James analyst Josh Beck cautioned that, despite the current positive outlook surrounding AI, the long-term effects on Google’s sales remain uncertain.