Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic that Google’s recent advancements in artificial intelligence will positively impact its second-quarter earnings. Google’s parent company, Alphabet, is scheduled to announce its earnings on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have adjusted their revenue forecasts for Google upward. They attribute this to the integration of Gemini into Google Cloud and the AI Overviews feature within Google Search, which they believe will enhance sales.
In a research note, the analysts expressed confidence that the growing AI applications in Google’s ecosystem will stimulate increased activity in its core Search operations. This comes despite initial challenges with the AI Overviews rollout, which faced criticism online for inaccuracies. They have raised their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, driven in part by its AI initiatives. This growth contributed to a surge in its stock price, elevating the company’s market capitalization to exceed $2 trillion, putting it alongside industry giants like Apple, Microsoft, and Nvidia.
The positive performance in the first quarter followed the launch of several AI products within the Gemini AI framework. Highlights from Google’s recent developer conference, Google I/O, included a futuristic AI assistant capable of interacting through smart glasses. Google asserts that its latest Gemini AI is 20% faster than the newest version of ChatGPT.
Dan Ives from Wedbush took a more cautious stance on AI Overviews but noted their potential to support Search monetization in the long run. He also highlighted that AI is already having a positive effect on Google Cloud, forecasting a 27% rise in Cloud revenue compared to last year.
Doug Anmuth of J.P. Morgan also shared an upbeat outlook, naming Google among the firm’s top tech stock picks, alongside Uber and Amazon. He expressed optimism regarding Google’s progress in generative AI ahead of the earnings report.
However, analyst Josh Beck from Raymond James cautioned that, while the current sentiment around AI is favorable, the long-term impact of AI on Google’s sales remains uncertain.