Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s recent advancements in artificial intelligence are likely to enhance its earnings for the second quarter. Alphabet, Google’s parent company, is scheduled to announce its earnings on Tuesday.
Bank of America analysts, Justin Post and Nitin Bansal, have revised their revenue forecasts upward for Google, anticipating that the integration of Gemini into Google Cloud and AI Overviews in Google Search will contribute positively to sales. They expressed optimism regarding the expanding AI features across Google’s platform, noting that a more extensive rollout of AI overviews could stimulate increased engagement in its main Search division. This positive outlook persisted despite some initial challenges during the rollout of AI overviews, which had drawn criticism for inaccuracies. The analysts raised their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, largely attributed to its AI developments. This strong performance led to a surge in its stock price, elevating the company’s market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s impressive first-quarter results followed a series of new artificial intelligence product launches under its Gemini AI framework. At the recent Google I/O developer conference, the company unveiled an advanced AI assistant anticipated to interact with users through smart glasses, claiming that the latest Gemini AI operates 20% faster than the newest version of ChatGPT.
Meanwhile, Dan Ives from Wedbush expressed a more cautious stance on AI Overviews compared to his peers but acknowledged that it could eventually support Search monetization. He noted that AI is already enhancing Google Cloud’s performance, projecting a 27% year-over-year increase in Cloud revenue.
Doug Anmuth of J.P. Morgan shared the positive outlook, ranking Google among his firm’s top tech stocks alongside Uber and Amazon, while expressing enthusiasm regarding the advancements in Generative AI ahead of the upcoming earnings report. Conversely, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding AI is optimistic, it remains to be seen whether AI can consistently drive long-term sales growth for Google.