Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively impact its upcoming second-quarter earnings report. Alphabet, Google’s parent company, is scheduled to release its earnings after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have adjusted their revenue forecasts for Google upward, citing the integration of Gemini AI into Google Cloud and the addition of AI Overviews in Google Search as key factors for increased sales. They expressed optimism about the continued growth of AI across Google’s services, noting that the wider implementation of AI overviews could enhance user engagement in the core Search business, despite some initial flaws in the rollout.
In its first-quarter report from April, Google announced a remarkable 60% profit increase, fueled by AI developments, which surged its stock price and pushed its market capitalization beyond $2 trillion, joining tech giants like Apple, Microsoft, and Nvidia.
The company’s strong performance followed several new product releases under its Gemini AI initiative, including a futuristic universal AI assistant designed to operate through smart glasses. Google has claimed that its latest Gemini AI operates 20% faster than the most recent version of ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious view on the potential of AI Overviews, he acknowledged that they could benefit Search monetization over time. He noted that AI’s impact is already being realized in Google Cloud, and like many analysts, anticipates a 27% increase in Cloud revenue compared to the previous year.
J.P. Morgan analyst Doug Anmuth also shared a positive outlook, labeling Google as one of the investment firm’s top tech stocks alongside Uber and Amazon, highlighting encouragement from the progress in generative AI ahead of Alphabet’s earnings report.
Raymond James analyst Josh Beck cautioned that although the current narrative surrounding Google and AI is optimistic, it remains to be seen whether this momentum will sustain long-term sales growth for the company.