Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings. Alphabet, Google’s parent company, is expected to release its earnings report after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have adjusted their revenue forecasts for Google, citing the integration of AI features like Gemini into Google Cloud and AI Overviews in Google Search as key drivers for increased sales. In a research note released last week, they expressed optimism regarding the expansion of AI integrations within Google’s ecosystem, believing that a wider adoption of AI overviews would enhance user activity in the core Search business, despite initial challenges with the rollout. They have also increased their price target for Google’s stock from $200 to $206.
In its April earnings report, Google announced a remarkable 60% profit increase in the first quarter, largely attributed to its AI developments, which propelled its stock price and market capitalization beyond the $2 trillion threshold, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
The strong performance in Google’s first quarter followed significant announcements of new AI products, particularly during the Google I/O developer conference, where they unveiled advancements such as a universal AI assistant capable of interacting through smart glasses. Google claims its latest Gemini AI operates at a speed 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed some caution regarding the potential impact of AI Overviews on Search monetization, he noted that AI is already enhancing Google Cloud’s performance. He, along with other analysts, anticipates that Google will report a 27% increase in Cloud revenue compared to last year.
J.P. Morgan analyst Doug Anmuth also conveyed an optimistic outlook, designating Google as one of the top tech stocks for investment, along with Uber and Amazon, citing encouraging progress in generative AI ahead of Alphabet’s earnings announcement. Conversely, Raymond James analyst Josh Beck highlighted uncertainty about whether the current AI momentum will translate into sustained sales growth for Google in the long run.