Analysts from Wedbush, J.P. Morgan, and Bank of America expect Google’s AI advancements to positively influence its upcoming second-quarter earnings report, set to be released after market close on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue forecast for Google, citing the integration of the Gemini AI into Google Cloud and AI Overviews in Google Search as key drivers of increased sales. They noted, despite some initial challenges with the rollout of AI overviews, that these improvements could enhance user engagement in Google’s core Search business. Consequently, they raised their stock price target for Google from $200 to $206.
In its first quarter, which was reported in April, Google enjoyed a remarkable 60% profit increase, largely attributed to its AI developments. Following this report, the company’s stock surged, elevating its market capitalization beyond $2 trillion alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s significant first-quarter success followed a series of new AI product launches, particularly through its Gemini offerings. Notable announcements at the recent Google I/O developer conference included a universal AI assistant capable of visual interactions through smart glasses. Google claims that its latest Gemini AI performs 20% faster than the latest ChatGPT.
While Wedbush analyst Dan Ives expressed some caution regarding the AI Overviews, he acknowledged their potential to benefit Search monetization in the long run. He noted that AI is already having a positive impact on Google Cloud, with a projected 27% rise in Cloud revenue compared to last year.
J.P. Morgan analyst Doug Anmuth shared an optimistic outlook and highlighted Google as one of the firm’s top technology stock picks, alongside Uber and Amazon. He expressed confidence in the advancements in generative AI ahead of Alphabet’s earnings announcement. However, Raymond James analyst Josh Beck cautioned that although the current perception of Google’s AI initiatives is promising, the long-term impact on sales remains uncertain.