Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will enhance its earnings in the second quarter. The parent company, Alphabet, is scheduled to release its earnings report after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have raised their revenue projections for Google, citing the integration of Gemini into Google Cloud and the AI Overviews feature in Google Search as key factors for increased sales. They expressed optimism about the growing role of AI across Google’s ecosystem, believing that the broader implementation of AI Overviews will enhance user engagement in the core Search business, despite some initial challenges when the feature faced criticism for inaccuracies. Their revised price target for Google’s stock has increased from $200 to $206.
In its first quarter, Google reported an impressive 60% surge in profits, largely attributed to its AI initiatives, which led to a significant rise in its stock price and pushed its market capitalization beyond the $2 trillion threshold, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
Following a series of AI product launches as part of its Gemini offerings, including a futuristic universal AI assistant, Google has positioned itself as a frontrunner in AI technology. The company claims that its Gemini AI is 20% quicker than the latest version of ChatGPT.
Dan Ives from Wedbush expressed a more cautious view on AI Overviews compared to his peers but noted that it could enhance Search monetization over time. He also highlighted that AI is contributing positively to Google Cloud, predicting a 27% rise in Cloud revenue year-over-year.
Doug Anmuth from J.P. Morgan echoed the optimistic outlook, naming Google as one of the firm’s top tech stock picks alongside Uber and Amazon, stating that they are “encouraged by GenAI progress” ahead of Alphabet’s earnings report. However, Raymond James analyst Josh Beck cautioned that while the current narrative around AI is favorable, it remains uncertain whether AI will sustainably boost Google’s sales in the long run.