Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will contribute positively to its second-quarter earnings, as Alphabet prepares to announce its financial results on Tuesday.
Following the disclosure of another quarterly loss, Trump Media’s stock experienced a 7% decline. Analysts from Bank of America, including Justin Post and Nitin Bansal, have increased their revenue forecasts for Google. They believe that the incorporation of Gemini into Google Cloud and the AI Overviews feature in Google Search will enhance sales.
In a recent research note, they expressed optimism about the ongoing integration of AI across Google’s platforms, suggesting that the wider implementation of AI Overviews could enhance user engagement with the core Search service. This comes despite some initial challenges, including instances where the tool generated inaccuracies that became the subject of online humor. Post and Bansal have raised their stock price target for Google from $200 to $206.
In its April earnings report, Google revealed a remarkable 60% profit increase for the first quarter, largely attributed to its AI initiatives. This performance led to a surge in the company’s stock price, elevating its market capitalization to over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s strong showing in the first quarter followed a series of new AI product launches as part of its Gemini AI portfolio. At the Google I/O developer conference, the company introduced a universal AI assistant designed to interact through smart glasses. Google claims its latest Gemini AI outperforms the newest version of ChatGPT by being 20% faster.
While Wedbush analyst Dan Ives expressed a more cautious stance on AI Overviews compared to Post and Bansal, he acknowledged the potential for these features to benefit Search monetization in the long run. He also noted that AI is already having a positive impact on Google Cloud, aligning with the broader Wall Street expectation of a 27% increase in Cloud revenue compared to the previous year.
J.P. Morgan analyst Doug Anmuth shared a similarly positive outlook, highlighting Google as one of the firm’s top technology investments alongside Uber and Amazon. He noted that his team is “encouraged by GenAI progress” ahead of Alphabet’s upcoming earnings announcement. Conversely, Raymond James analyst Josh Beck cautioned that while the current AI narrative is promising, the long-term impact of AI on Google’s sales remains uncertain.