Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its financial performance in the upcoming second-quarter earnings report, set to be released after market hours on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue projections for Google, emphasizing the positive impact of the Gemini integration into Google Cloud and the AI Overviews functionality in Google Search. They believe these developments will significantly elevate sales figures. “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,” they noted in a recent research update. This comes despite initial setbacks during the rollout of AI Overviews, which had sparked humorous criticisms online due to some inaccuracies. They also increased their price target for Google’s stock from $200 to $206.
In April, Google reported a 60% profit increase for the first quarter, largely attributed to AI advancements, leading to a surge in its stock price and pushing its market capitalization above $2 trillion, joining the ranks of tech giants like Apple, Microsoft, and Nvidia.
The first-quarter results followed a series of new AI product announcements under the Gemini AI brand. Notable updates presented at the Google I/O developer conference include a universal AI assistant capable of interacting through smart glasses. Google has claimed that its latest iteration of Gemini AI outperforms the newest ChatGPT by 20%.
While Wedbush analyst Dan Ives expressed cautious optimism about the potential of AI Overviews, he noted that it could eventually benefit Search monetization. Furthermore, he indicated that Google Cloud already reflects the positive effects of AI innovations, forecasting a 27% rise in Cloud revenue compared to the previous year.
J.P. Morgan analyst Doug Anmuth shared a similar positive outlook, identifying Google as one of the top technology investment options alongside Uber and Amazon, citing progress in generative AI as a motivating factor leading up to Alphabet’s earnings reveal.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding AI’s impact on Google is optimistic, its long-term ability to consistently drive sales remains uncertain.