Analysts from Wedbush, J.P. Morgan, and Bank of America suggest that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings. Alphabet, Google’s parent company, is expected to release its earnings report Tuesday after the market closes.
Bank of America analysts Justin Post and Nitin Bansal have adjusted their revenue forecasts upward, attributing this change to the integration of the Gemini AI platform into Google Cloud and the inclusion of AI Overviews in Google Search, which they believe will enhance sales. They expressed optimism about the increasing adoption of AI across Google’s services, predicting that a wider deployment of AI Overviews could lead to increased activity in core search functionalities. Despite earlier issues with the AI Overview’s initial rollout—which included errors that became the subject of online jokes—they raised their price target for Google’s stock from $200 to $206.
In its previous earnings report for the first quarter, Google reported a 60% profit surge, driven in part by its AI initiatives. This strong performance caused its stock price to rise significantly, elevating its market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The company’s positive first-quarter results came on the heels of numerous artificial intelligence product launches, including innovations unveiled at the Google I/O developer conference, such as a universal AI assistant projected to work through users’ smart glasses. Google has stated that its latest Gemini AI is 20% faster than the most recent version of ChatGPT.
While Wedbush’s Dan Ives was more cautious about the immediate impact of AI Overviews, he acknowledged that they might lead to improved search monetization over time. He also noted that AI is already contributing positively to Google Cloud, predicting a 27% revenue increase in that sector year-over-year.
Doug Anmuth from J.P. Morgan also expressed a favorable view of Google’s prospects, listing it among the firm’s top technology stocks along with Uber and Amazon, and highlighting progress in GenAI as promising ahead of the upcoming earnings report.
Conversely, analyst Josh Beck from Raymond James advised caution, suggesting that while the current narrative surrounding AI’s impact on Google is optimistic, the long-term effects on sales growth remain uncertain.