Analysts from Wedbush, J.P. Morgan, and Bank of America suggest that Google’s advancements in artificial intelligence (AI) are likely to enhance the company’s earnings for the second quarter. Alphabet, Google’s parent company, is scheduled to release its earnings report on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue forecasts for Google, highlighting the positive impact of integrating Gemini into Google Cloud and the AI Overviews feature in Google Search. They noted that these developments are expected to increase sales, despite initial challenges with the AI Overviews tool, which faced criticism for its inaccuracies.
Following a remarkable 60% profit increase in the first quarter—attributed in part to AI innovations—Google’s stock price surged, elevating its market capitalization beyond $2 trillion, joining tech giants like Apple, Microsoft, and Nvidia. The company’s strong performance is linked to its robust rollout of new AI products, particularly showcased during the recent Google I/O developer conference.
While Wedbush’s Dan Ives is cautious about the immediate impact of AI Overviews on Search monetization, he acknowledges that AI is already providing a boost to Google Cloud services. He aligns with other Wall Street analysts, predicting a 27% rise in Cloud revenue year-over-year.
J.P. Morgan’s Doug Anmuth describes Google as one of the firm’s top technology stocks and expresses optimism over the progress of generative AI, especially ahead of the upcoming earnings report. However, Raymond James analyst Josh Beck emphasizes that the long-term effects of AI on Google’s sales remain uncertain, despite the current positive sentiment.