Analysts from Wedbush, J.P. Morgan, and Bank of America believe that Google’s advancements in artificial intelligence will enhance its second-quarter earnings. Alphabet, Google’s parent company, is scheduled to announce its earnings after the market closes on Tuesday.
Trump Media shares dropped by 7% following the release of its latest quarterly loss.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, noting that the integration of Gemini into Google Cloud and AI Overviews in Google Search is likely to drive sales. They expressed optimism about AI’s role in boosting activity in Google’s core Search business, despite initial challenges with AI Overviews that sparked internet humor due to inaccuracies. Their price target for Google stock has been raised from $200 to $206.
In April, Google reported a remarkable 60% increase in profits in the first quarter, largely attributed to AI developments. This prompted a surge in its stock price and pushed its market capitalization beyond $2 trillion, positioning it alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s strong performance in the first quarter was bolstered by several new AI product releases as part of its Gemini AI initiative. At the recent Google I/O developer conference, the company showcased a futuristic universal AI assistant capable of interacting through smart glasses. Google claims its latest Gemini AI is 20% faster than the most recent version of ChatGPT.
While Wedbush’s Dan Ives was somewhat cautious about the long-term impacts of AI Overviews, he acknowledged that they could eventually support Search monetization. He also noted that AI is already benefiting Google Cloud, predicting a 27% increase in Cloud revenue from the previous year.
J.P. Morgan analyst Doug Anmuth shared a positive outlook for Google, identifying it as one of the investment firm’s top tech stocks alongside Uber and Amazon, and highlighting progress in general AI ahead of Alphabet’s earnings report.
However, Raymond James analyst Josh Beck cautioned that, despite the current favorable AI narrative, it remains uncertain whether AI will significantly boost Google’s sales in the long run.