Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings. Google’s parent company, Alphabet, is scheduled to announce its earnings on Tuesday.
Recent assessments by Bank of America and Wedbush have resulted in an improved revenue forecast for Google. Bank of America analysts Justin Post and Nitin Bansal attribute this boost to the integration of the Gemini AI into Google Cloud and the AI Overviews feature in Google Search, which they believe will enhance sales.
In a recent research note, they stated, “We remain positive on growing AI integrations across Google’s ecosystem and think a broader rollout of AI overviews will help drive higher activity in the core Search business,” despite some initial challenges that led to internet jokes about AI Overviews producing errors. As a result, they raised their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% increase in profits during the first quarter, driven in part by AI contributions, which significantly boosted its stock price and market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s impressive first-quarter results followed a series of new AI product launches under its Gemini initiative. At the most recent Google I/O developer conference, the company unveiled a universal AI assistant capable of visual interaction through smart glasses. Google claims its new Gemini AI is 20% faster than the latest version of ChatGPT.
Dan Ives from Wedbush expressed a more cautious approach regarding AI Overviews, suggesting it might provide a gradual benefit for search monetization in the future. However, he agreed that AI is currently enhancing Google Cloud’s performance, with expectations for a 27% revenue increase compared to last year.
Doug Anmuth from J.P. Morgan mirrored this optimistic outlook, recently naming Google among the firm’s top technology investment choices alongside Uber and Amazon. He noted the team’s encouragement regarding advancements in generative AI ahead of Alphabet’s quarterly earnings report.
Raymond James analyst Josh Beck cautioned that while the current narrative surrounding Google’s AI is upbeat, it remains uncertain if AI will lead to sustained sales growth in the long run.