Analysts from Wedbush, J.P. Morgan, and Bank of America have expressed optimism about Google’s upcoming second-quarter earnings, attributing expected growth to the company’s advancements in artificial intelligence (AI). Alphabet, Google’s parent company, is set to disclose its earnings on Tuesday.
Both Bank of America analysts, Justin Post and Nitin Bansal, have increased their revenue forecasts for Google, crediting the integration of Gemini into Google Cloud and the introduction of AI Overviews in Google Search as key factors in boosting sales. They believe that the extensive integration of AI across Google’s services will enhance user engagement, particularly in the core Search business, despite some initial challenges with the AI Overviews tool, which faced criticism due to errors and inaccuracies during its early release. Post and Bansal have adjusted their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, largely driven by its AI initiatives, which helped elevate the company’s market capitalization beyond $2 trillion. Google’s performance was bolstered by a series of AI product launches, especially under the Gemini AI branding. Notably, at the Google I/O developer conference, the company unveiled a future AI assistant capable of interactive communication through smart glasses—highlighting that the latest Gemini AI is 20% faster than its competitor, ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious view on the potential of AI Overviews, he acknowledged that these features could support search monetization as they mature. He also confirmed that AI is already positively impacting Google Cloud services, predicting a 27% increase in Cloud revenue compared to last year.
J.P. Morgan’s Doug Anmuth shared this optimistic outlook, naming Google as one of its top technology stocks, alongside Uber and Amazon, noting progress in Generative AI (GenAI) ahead of Alphabet’s earnings report. Conversely, Raymond James analyst Josh Beck cautioned that the long-term effects of AI on Google’s sales are still uncertain.
In summary, many analysts are hopeful that Google’s investments in AI will continue to yield positive results, both in immediate earnings and longer-term growth potential. This period of innovation places Google in a strong position within the competitive landscape of technology, suggesting a bright outlook for the company as it embraces AI advancements.