Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence are likely to enhance its earnings for the second quarter. Google parent company Alphabet is scheduled to announce its earnings on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have raised their revenue forecasts for Google, attributing this optimism to the integration of the Gemini AI system into Google Cloud and the AI Overviews feature in Google Search, which they believe will significantly increase sales.
In a research note, they expressed their confidence in the growing integration of AI across Google’s services, suggesting that a wider deployment of AI Overviews could lead to increased activity in the core Search segment. This comes despite initial challenges with the rollout of AI Overviews, which faced criticism for inaccuracies. They have also adjusted their price target for Google stock from $200 to $206.
Google reported a remarkable 60% profit increase in the first quarter of this year, largely driven by its AI products, which propelled its stock and market capitalization beyond the $2 trillion mark, joining the ranks of Apple, Microsoft, and Nvidia.
Following months of AI product releases, including innovations showcased at Google I/O, the company’s AI initiatives have made substantial strides. One notable release is a universal AI assistant capable of interacting with users through smart glasses. Google claims its latest Gemini AI outperforms the newest ChatGPT, being 20% faster.
While Wedbush analyst Dan Ives expressed some skepticism about AI Overviews, he noted potential for long-term benefits in Search monetization. He also highlighted that AI is already positively impacting Google Cloud, projecting a 27% year-over-year revenue increase.
J.P. Morgan analyst Doug Anmuth recently identified Google as one of the firm’s top technology stocks, alongside Uber and Amazon, expressing optimism about the company’s Generative AI advancements in anticipation of the forthcoming earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding Google’s AI is favorable, the long-term impact on sales remains uncertain.