Google’s AI Innovations Set to Boost Q2 Earnings: Analysts Weigh In

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Google’s advancements in artificial intelligence are expected to enhance its earnings for the second quarter, according to analysts from Wedbush, J.P. Morgan, and Bank of America. The parent company, Alphabet, is scheduled to announce its earnings on Tuesday evening.

Analysts from Bank of America, Justin Post and Nitin Bansal, have elevated their revenue forecasts for Google, attributing this to the firm’s integration of the Gemini AI into Google Cloud and the AI Overviews feature in Google Search. They expressed confidence that these AI enhancements will lead to increased sales, 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,” despite some early missteps with the AI Overviews tool.

In April, Google announced a remarkable 60% increase in profits for the first quarter, partly driven by its AI capabilities, leading to a rise in its stock price and boosting its market capitalization beyond the $2 trillion milestone, joining the ranks of Apple, Microsoft, and Nvidia.

This positive momentum followed several months of new AI product launches from Google’s Gemini offerings. Notable features debuted at the Google I/O developer conference included a universal AI assistant capable of interacting through smart glasses, with Google claiming this latest version of Gemini AI is 20% faster than the current ChatGPT.

While Wedbush analyst Dan Ives expressed some reservations about the long-term impact of AI Overviews, he acknowledged that it might bolster Search monetization over time. Ives noted that AI is already benefiting Google Cloud and, like many analysts, projects a 27% year-over-year increase in Cloud revenue.

Doug Anmuth from J.P. Morgan echoed this optimism, highlighting Google as one of the firm’s top tech stock picks, alongside Uber and Amazon, and stating that his team is encouraged by the progress in GenAI leading up to Alphabet’s second-quarter earnings release.

However, Raymond James analyst Josh Beck cautioned that although the current narrative around AI is favorable for Google, the long-term effects on sales remain uncertain.

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