Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will enhance its second-quarter earnings. Alphabet, Google’s parent company, is scheduled to release its earnings report on Tuesday after the market closes.
Bank of America analysts Justin Post and Nitin Bansal, along with Wedbush analysts, have increased their revenue forecasts for Google. They believe the integration of the Gemini AI into Google Cloud and the AI Overviews feature in Google Search will positively impact sales. Despite some initial issues with the rollout of AI Overviews—where the tool stumbled and generated erroneous information—they uphold a positive outlook on the ongoing AI integrations throughout Google’s ecosystem. Consequently, they have raised their target price for Google’s stock from $200 to $206.
In the first quarter of this year, Google reported a remarkable 60% increase in profits, largely attributed to its AI initiatives, resulting in a surge in its stock price and elevating the company’s market capitalization above $2 trillion, alongside tech giants like Apple, Microsoft, and Nvidia.
Following the successful launch of various AI products as part of the Gemini AI offerings, Google showcased its latest innovations during its developer conference, Google I/O, including a universal AI assistant capable of visual and verbal interaction through smart glasses. The company claims that its latest version of Gemini AI is 20% faster than the most recent ChatGPT.
While Wedbush’s Dan Ives holds a slightly cautious view on AI Overviews, he acknowledges its potential as a long-term benefit for Search monetization. He also noted that AI is currently contributing positively to Google Cloud, projecting a 27% year-over-year increase in Cloud revenue, in line with other analysts’ expectations.
J.P. Morgan analyst Doug Anmuth expressed similar optimism, naming Google as one of the firm’s top tech stock recommendations, alongside Uber and Amazon, and indicating a positive outlook due to progress in generative AI. However, Raymond James analyst Josh Beck cautioned that while the short-term AI narrative appears favorable for Google, the long-term impact on sales remains uncertain.