Analysts from Wedbush, J.P. Morgan, and Bank of America suggest that Google’s advancements in artificial intelligence will enhance its earnings for the second quarter. Alphabet, Google’s parent company, is set to announce its earnings this Tuesday.
Following a partnership with Uber, shares of Darden Restaurants have seen a notable increase. Bank of America and Wedbush analysts have both upgraded their revenue projections for Google. Justin Post and Nitin Bansal from Bank of America believe the incorporation of the Gemini AI into Google Cloud and enhanced AI functionalities in Google Search will drive sales upward.
They expressed optimism about the ongoing integration of AI within Google’s ecosystem, predicting that the expanded use of AI overviews will boost engagement in the core Search business. This comes despite some challenges faced during the initial implementation of AI overviews, which received notable backlash for inaccuracies. Post and Bansal have adjusted their price target for Google’s stock from $200 to $206.
Earlier this year, Google reported a remarkable 60% profit increase in the first quarter, fueled partially by its AI innovations. Following this news, its stock price surged, elevating its market cap to over $2 trillion, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s strong performance in Q1 followed a series of launches in its Gemini AI lineup. Notable announcements from its developer conference, Google I/O, included an advanced universal AI assistant capable of interacting through smart glasses. Google asserts that its latest Gemini AI model is 20% faster than the most recent iteration of ChatGPT.
Dan Ives from Wedbush expressed more caution about the immediate impact of AI Overviews but acknowledged that they could eventually support Search monetization. He noted that AI is already contributing positively to Google Cloud revenue, projecting a 27% growth compared to the previous year.
J.P. Morgan’s Doug Anmuth shared a similarly favorable view, highlighting Google as one of the firm’s preferred technology stocks, alongside Uber and Amazon. He expressed optimism about the advances in generative AI just before Alphabet’s earnings report.
However, Josh Beck from Raymond James cautioned that, while the current outlook on AI for Google appears positive, its ability to drive long-term sales growth remains uncertain.