Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s upcoming second-quarter earnings, anticipating a favorable impact due to the company’s advancements in artificial intelligence. Alphabet, Google’s parent company, is scheduled to announce its earnings on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have raised their revenue forecasts for Google, highlighting the integration of the Gemini AI into Google Cloud and the AI Overviews feature in Google Search as factors that may enhance sales. In a recent research note, they emphasized their positive outlook on AI integrations, suggesting that a wider release of AI Overviews could lead to increased activity in Google’s core Search division, despite earlier issues during its initial rollout which attracted criticism for inaccuracies. Their price target for Google’s stock has been increased from $200 to $206.
In April, Google reported a remarkable 60% surge in profits for the first quarter, attributed partly to its AI initiatives, causing its stock price to spike and pushing its market capitalization over $2 trillion, joining Apple, Microsoft, and Nvidia in this exclusive club.
The strong performance in the first quarter followed a series of new AI product launches under Google’s Gemini AI umbrella. Notable developments unveiled at the Google I/O conference included a futuristic universal AI assistant capable of interacting through smart glasses. Google claims that its latest Gemini AI is 20% faster than the newest version of ChatGPT.
While Wedbush analyst Dan Ives expressed some reservations about the potential of AI Overviews, he acknowledged that these innovations could eventually benefit Search monetization. Furthermore, he noted that AI is already enhancing Google Cloud, predicting a 27% year-over-year increase in its revenue.
J.P. Morgan’s Doug Anmuth also shared a positive perspective, identifying Google as one of the firm’s top technology stock picks alongside Uber and Amazon. He expressed encouragement regarding the progress of Generative AI ahead of Alphabet’s earnings report.
However, Raymond James analyst Josh Beck cautioned that although the current AI developments appear beneficial for Google, it remains uncertain whether these advancements will sustain long-term sales growth.