Analysts from Wedbush, J.P. Morgan, and Bank of America believe Google’s advancements in artificial intelligence will positively impact its second-quarter earnings, with Alphabet, Google’s parent company, set to announce figures soon.
Bank of America analysts Justin Post and Nitin Bansal have revised their revenue forecasts for Google, anticipating that the integration of Gemini AI into Google Cloud and AI overviews within Google Search will enhance sales. They expressed optimism about the increasing AI functionalities within Google’s ecosystem, suggesting that a wider deployment of these AI tools could lead to higher engagement in the core Search segment. Despite some initial missteps with the AI overviews, which drew humorous reactions online due to inaccuracies, Post and Bansal have raised their price target for Google’s stock from $200 to $206.
In its first quarter report released in April, Google saw a remarkable profit increase of 60%, largely attributed to its AI initiatives. This impressive performance led to a surge in its stock price and elevated the company’s market capitalization beyond $2 trillion, alongside tech giants like Apple, Microsoft, and Nvidia.
Following a series of AI product launches as part of its Gemini offerings, including a forward-looking universal AI assistant designed to interact through smart glasses, Google reported strong results. The company claims its latest Gemini AI is 20% faster than the latest version of ChatGPT.
Dan Ives from Wedbush has a more cautious outlook on the potential of AI overviews compared to his counterparts, noting it might eventually support Search monetization but is not guaranteed. However, he also mentioned that AI has already begun to drive growth for Google Cloud, predicting a 27% year-over-year revenue increase in this segment.
Doubling down on the positive outlook, Doug Anmuth from J.P. Morgan named Google as one of the firm’s top tech stock picks, alongside Uber and Amazon, citing excitement over GenAI advancements ahead of the second-quarter earnings announcement.
Despite the optimistic narrative surrounding Google’s AI developments, analyst Josh Beck from Raymond James cautioned that the long-term impact of AI on driving sales growth for Google remains uncertain.