Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s upcoming second-quarter earnings report, anticipating a positive impact from the company’s moves in artificial intelligence. Alphabet, Google’s parent company, is set to disclose its earnings after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue projections for Google, citing the integration of Gemini into Google Cloud and the introduction of AI overviews in Google Search as key contributors to potential sales growth. Despite some initial challenges with the AI Overview tool, which faced criticism for inaccuracies, they believe that its broader implementation will enhance user engagement in the core Search business. Consequently, they raised their price target for Google stock from $200 to $206.
In April, Google revealed a substantial 60% rise in profits for the first quarter, aided by its developments in AI. This strong performance propelled its stock price up, helping the company achieve a market capitalization exceeding $2 trillion, a milestone shared with Apple, Microsoft, and Nvidia.
The company’s successful first-quarter results followed months of launching new AI products under its Gemini AI strategy. Among these innovations revealed at the Google I/O developer conference was a universal AI assistant capable of interacting via smart glasses. Google asserts that its latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed caution regarding the potential of AI Overviews, he acknowledged that AI is already positively impacting Google Cloud, projecting a 27% revenue increase in that segment compared to the previous year.
J.P. Morgan’s Doug Anmuth also shared a favorable outlook, listing Google as one of the firm’s top tech stocks alongside Uber and Amazon, expressing optimism about the advancements in generative AI ahead of Alphabet’s earnings report.
However, analyst Josh Beck from Raymond James cautioned that, although the current AI narrative surrounding Google appears positive, the long-term implications for sales growth driven by AI remain uncertain.