Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence are likely to enhance its second-quarter earnings as Alphabet prepares to announce earnings on Tuesday.
Bank of America’s analysts, Justin Post and Nitin Bansal, have increased their revenue projections for Google. They believe the integration of the Gemini AI into Google Cloud and the introduction of AI Overviews in Google Search will boost sales. Despite some initial setbacks where AI Overviews faced criticism for inaccuracies, the analysts remain optimistic about AI’s potential to enhance activity in Google’s core Search business. They have raised their price target for Google’s stock from $200 to $206.
In April, Google reported a 60% surge in profits for the first quarter, attributing some of this success to AI innovations. This resulted in a significant increase in the company’s stock price, elevating its market capitalization beyond $2 trillion, thus joining the ranks of industry giants like Apple, Microsoft, and Nvidia.
Google’s impressive first-quarter results followed the launch of various AI products as part of its Gemini AI initiative. Among the most notable announcements at the Google I/O developer conference was a universal AI assistant capable of interacting with users through smart glasses. Google claims that its latest Gemini AI is 20% faster than the current version of ChatGPT.
While Wedbush analyst Dan Ives has expressed a more cautious outlook on the impact of AI Overviews, he acknowledged that it could contribute positively to Search monetization in the future. Ives also noted that AI is already enhancing Google Cloud, and he, along with other analysts, anticipates a 27% increase in Cloud revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth shared a similar optimistic view, designating Google as one of the firm’s top technology stocks alongside Uber and Amazon, commending the firm’s progress in generative AI ahead of Alphabet’s earnings report. However, analyst Josh Beck from Raymond James cautioned that while the current narrative around AI at Google is largely positive, its long-term effect on sales remains to be seen.