Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its second-quarter earnings. Google parent company Alphabet is set to disclose its earnings on Tuesday evening.
Bank of America analysts Justin Post and Nitin Bansal have raised their revenue forecasts for Google, attributing this to the integration of Gemini into Google Cloud and the introduction of AI Overviews in Google Search. They expressed optimism, stating, “We remain positive on growing AI integrations across Google’s ecosystem and think a broader rollout of AI overviews will help drive higher activity in the core Search business.” This comes despite the initial challenges faced during the rollout of AI Overviews, which garnered attention online due to inaccuracies. Consequently, they have increased their price target for Google’s stock from $200 to $206.
In April, Google revealed a remarkable 60% profit surge in the first quarter, significantly aided by AI developments. This impressive performance led to a spike in its stock price, elevating the company’s market capitalization to over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Following a series of new AI product releases, including at the Google I/O developer conference, Google continues to innovate within its Gemini AI framework. Its latest technology features a universal AI assistant capable of interacting through smart glasses and is reportedly 20% faster than the newest version of ChatGPT.
Dan Ives from Wedbush provided a more cautious perspective on AI Overviews but acknowledged that they “may become a tailwind for Search monetization over time.” He noted that AI has already started to enhance revenues for Google Cloud, anticipating a 27% year-over-year increase in that segment.
Doug Anmuth of J.P. Morgan shared a positive outlook, naming Google among his top tech stock picks alongside Uber and Amazon, and expressing optimism regarding the company’s progress in generative AI as they approach their second-quarter earnings announcement.
However, Josh Beck from Raymond James cautioned that while the current narrative surrounding AI is favorable, the long-term impact on Google’s sales remains uncertain.