Google’s advancements in artificial intelligence are projected to enhance its earnings for the second quarter, according to analysts from Wedbush, J.P. Morgan, and Bank of America. The parent company, Alphabet, is scheduled to release its earnings report after market close on Tuesday.
Analysts from Bank of America and Wedbush have revised their revenue forecasts for Google. Bank of America analysts Justin Post and Nitin Bansal highlighted that the incorporation of Gemini into Google Cloud and the implementation of AI Overviews in Google Search are expected to boost sales.
In a recent research note, they expressed confidence in the growing AI integrations across Google’s ecosystem, believing that a wider deployment of AI overviews will stimulate increased activity in the core Search business. This optimism persists despite some initial challenges with AI overviews, which faced criticism for inaccuracies. As a result, Post and Bansal raised their price target for Google’s stock from $200 to $206.
Earlier this year, Google reported a remarkable 60% surge in first-quarter profits, largely attributed to its AI developments. This impressive performance led to a notable rise in its stock price, surpassing a market capitalization of $2 trillion, placing Google alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s strong first-quarter results followed several new AI product launches related to its Gemini AI suite. At the recent Google I/O developer conference, the company showcased a future AI assistant capable of interacting through smart glasses. Google claims that its latest Gemini AI technology is 20% faster than the latest version of ChatGPT.
While Dan Ives from Wedbush was somewhat more cautious about AI Overviews compared to his counterparts, he noted that these developments could eventually support Search monetization. He also highlighted that AI is already positively impacting Google Cloud, estimating a 27% year-over-year increase in Cloud revenue.
Doug Anmuth from J.P. Morgan echoed the positive outlook and included Google among the firm’s top tech stock recommendations, alongside Uber and Amazon, praising the progress made in generative AI ahead of Alphabet’s earnings announcement.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding AI for Google is optimistic, the long-term implications for sales growth driven by AI remain uncertain.