Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence (AI) will positively influence its second-quarter earnings report, scheduled for release after market hours on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue projections for Google, citing the integration of the Gemini AI technology into Google Cloud and the introduction of AI Overviews in Google Search as key revenue drivers. They expressed confidence in the potential of AI tools to enhance user engagement in Google’s core search business, despite some initial challenges with the rollout that led to humorous criticisms online. They have raised their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% rise in quarterly profits, attributed in part to its AI initiatives, which resulted in the company’s market valuation exceeding $2 trillion, placing it among the tech giants like Apple, Microsoft, and Nvidia.
The company’s robust performance in the first quarter followed the launch of various AI products as part of its Gemini offerings. During its recent Google I/O developer conference, Google unveiled a highly advanced AI assistant capable of interacting through smart glasses and boasted that its updated Gemini AI is 20% quicker than the latest version of ChatGPT.
While Wedbush analyst Dan Ives was more cautious regarding the immediate impact of AI Overviews, he noted that it could enhance search monetization over time. He also highlighted the current positive impact of AI on Google Cloud, projecting a 27% increase in Cloud revenue compared to the previous year.
J.P. Morgan analyst Doug Anmuth shared the optimistic outlook, designating Google as one of the firm’s leading tech stock picks, alongside Uber and Amazon, noting encouragement from advancements in generative AI as they approach Alphabet’s earnings announcement.
However, Raymond James analyst Josh Beck cautioned that while Google’s current AI narrative is promising, its long-term impact on driving sales remains uncertain.