Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s recent advancements in artificial intelligence will contribute positively to its second-quarter earnings. Alphabet, Google’s parent company, is expected to announce its earnings report on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue forecasts for Google, citing the company’s integration of its Gemini AI into Google Cloud and AI features in Google Search as factors that will likely enhance sales. They express optimistic views on the increasing AI integrations throughout Google’s platforms, anticipating that a wider application of AI features could elevate user engagement in the Search segment. Despite some initial issues with the rollout of AI features, which drew some online criticism, Post and Bansal have raised their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, driven in part by its AI innovations. This performance led to a significant rise in its stock price, elevating the company’s market capitalization above $2 trillion, where it joined tech giants like Apple, Microsoft, and Nvidia.
The company’s strong start to the year follows a series of new AI product launches as part of its Gemini AI initiative. Notably, during their developer conference, Google showcased a new universal AI assistant capable of interacting through users’ smart glasses, claiming its latest Gemini AI offers a 20% speed advantage over the latest ChatGPT.
While Wedbush’s Dan Ives is somewhat less optimistic about the immediate impact of AI Overviews, he suggests it could benefit Search monetization in due course. He also believes that AI is already positively influencing Google Cloud, with expectations of a 27% revenue increase from the previous year.
J.P. Morgan’s Doug Anmuth also shared a positive outlook, designating Google as one of the investment firm’s top technology stocks alongside Uber and Amazon, citing encouragement from the advancements in generative AI ahead of Alphabet’s earnings call. However, Raymond James analyst Josh Beck cautioned that although the current AI narrative for Google appears favorable, its potential to drive long-term sales growth remains uncertain.