Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings. Alphabet, Google’s parent company, is scheduled to announce its earnings on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, attributing this to the successful integration of Gemini AI into Google Cloud and AI Overviews in Google Search. They expressed confidence in the potential of AI integrations across Google’s services, which they believe will enhance user activity in the core Search business. Despite some initial challenges with AI Overviews, which faced criticism for inaccuracies, they raised Google’s stock price target from $200 to $206.
In April, Google reported a remarkable 60% profit increase for the first quarter, driven in part by its AI initiatives, leading to a surge in its stock price and market capitalization exceeding $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s strong first-quarter performance followed several months of launching new AI products as part of its Gemini offerings. Notably, a groundbreaking universal AI assistant was unveiled at the Google I/O developer conference, designed to interact through smart glasses. Google claims that its latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious perspective on AI Overviews, he noted that these tools could eventually support Search revenue. He also highlighted growth in Google Cloud Revenue thanks to AI and predicted a 27% increase compared to the previous year.
J.P. Morgan analyst Doug Anmuth also shared a positive outlook, naming Google amongst its top tech stock recommendations, alongside Uber and Amazon, citing enthusiasm for generative AI advancements ahead of the earnings report.
However, analyst Josh Beck from Raymond James urged caution, suggesting that while the current AI narrative is encouraging for Google, its long-term impact on sales remains uncertain.