Google’s advancements in artificial intelligence are anticipated to enhance its second-quarter earnings, according to analysts from Wedbush, J.P. Morgan, and Bank of America. The parent company, Alphabet, is scheduled to report its earnings on Tuesday.
Analysts at Bank of America and Wedbush have elevated their revenue forecasts for Google. Specifically, Justin Post and Nitin Bansal from Bank of America believe that the integration of the Gemini AI into Google Cloud and the addition of AI Overviews in Google Search will drive sales growth. They expressed optimism in a recent research note, stating that the increased AI integrations across Google’s ecosystem should lead to enhanced activity in its core Search business, despite some initial challenges faced during the rollout of AI overviews, which drew criticism for producing errors. They have adjusted their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% surge in profits for the first quarter, largely attributed to its AI efforts. This performance led to a significant increase in the company’s stock price, elevating its market capitalization above $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s strong first-quarter results came after the launch of several new AI products under its Gemini series. Noteworthy releases at the recent Google I/O developer conference included a universal AI assistant capable of interacting through smart glasses. Google claims that its latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Dan Ives from Wedbush was slightly less optimistic about the immediate impact of AI Overviews, he acknowledged that it may eventually support search monetization. He noted that AI is already having a positive effect on Google Cloud, projecting a 27% increase in Cloud revenue year-over-year.
Doug Anmuth from J.P. Morgan mirrored the positive outlook, identifying Google as one of the firm’s top technology stock picks, alongside Uber and Amazon. He expressed enthusiasm for the progress made with GenAI in anticipation of Alphabet’s upcoming second-quarter earnings.
However, analyst Josh Beck from Raymond James cautioned that while the current sentiment surrounding AI at Google is favorable, the long-term impact of AI on the company’s sales remains uncertain.