Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings. The parent company Alphabet is scheduled to announce its earnings on Tuesday after the market closes.
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 AI Overviews in Google Search for this optimistic outlook. They believe that a more extensive implementation of AI overviews will enhance user engagement in the core Search business, even though initial phases faced criticism for accuracy issues. As a result, they have raised their price target for Google shares from $200 to $206.
In April, Google reported a remarkable 60% rise in profits for the first quarter, largely attributed to its AI initiatives. Following this news, the company’s stock price surged, elevating its market capitalization to over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s strong performance in the first quarter followed a series of new AI product launches under its Gemini offerings. Recently unveiled innovations at the Google I/O developer conference included a futuristic AI assistant capable of interacting via smart glasses. Google asserts that its latest Gemini AI model operates 20% faster than the recent version of ChatGPT.
Wedbush analyst Dan Ives expressed a more cautious view on the AI Overviews but recognized its potential to enhance Search monetization eventually. He also noted that AI is already contributing positively to Google Cloud’s performance, projecting a 27% year-over-year increase in Cloud revenue.
J.P. Morgan analyst Doug Anmuth shared an optimistic outlook, naming Google among the top tech stocks, alongside Uber and Amazon, while highlighting the encouraging advancements in Generative AI as Alphabet approaches its earnings report. However, Raymond James analyst Josh Beck cautioned that despite the favorable AI narrative surrounding Google, the long-term impact on sales remains uncertain.