Analysts from Wedbush, J.P. Morgan, and Bank of America believe that Google’s advancements in artificial intelligence could positively impact the company’s upcoming second-quarter earnings report, set to be released after market hours on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, citing the integration of the Gemini AI platform into Google Cloud and AI Overviews in Google Search as key factors that could enhance sales. They expressed optimism about the growing AI applications across Google’s services and anticipate that a wider introduction of AI Overviews will increase user engagement in the core Search business. Despite some initial challenges faced during the rollout of AI Overviews—when the feature garnered ridicule online for errors—Post and Bansal have raised their stock price target for Google from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, largely driven by AI innovations, which in turn propelled the stock price to surpass the $2 trillion market cap, joining the ranks of Apple, Microsoft, and Nvidia.
This positive performance coincided with numerous releases from Google’s Gemini AI offerings, including a futuristic universal AI assistant capable of interacting through smart glasses. Google claims its latest Gemini AI is 20% quicker than the latest version of ChatGPT.
While Wedbush analyst Dan Ives took a more cautious stance on AI Overviews compared to his counterparts, he noted that these tools could eventually support monetization in Search. He also stated that AI is already having a positive effect on Google Cloud, projecting a 27% revenue increase in that segment compared to last year.
J.P. Morgan’s Doug Anmuth echoed the optimistic outlook for Google, listing the company among the top tech stocks alongside Uber and Amazon, citing their enthusiasm about developments in generative AI as Alphabet prepares to announce its second-quarter earnings. However, Raymond James analyst Josh Beck cautioned that while the current AI narrative appears favorable, the long-term impact of AI on Google’s sales remains uncertain.