Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will positively influence its second-quarter earnings. 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, attributing this to the company’s integration of its Gemini AI into Google Cloud and AI Overviews in Google Search. They expressed optimism about the growing implementation of AI technologies within Google’s platform, emphasizing that an expanded rollout of AI Overviews is expected to enhance activity in its core Search business, despite initial challenges that included some humorous missteps in the tool’s rollout. They also revised their stock price target for Google from $200 to $206.
In April, Google reported an impressive 60% increase in profits for the first quarter, partly due to AI contributions, which led to a significant rise in stock price and boosted the company’s market valuation above $2 trillion, positioning it alongside tech giants like Apple, Microsoft, and Nvidia.
Following months of launching new AI products under its Gemini initiative, Google introduced a universal AI assistant at its recent developer conference, Google I/O. This assistant is designed to function interactively through smart glasses, and Google claims its latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious view of the AI Overviews than other analysts, he acknowledged the potential long-term benefits for Search monetization. Additionally, he noted that AI is already contributing positively to Google Cloud’s performance, with expectations for a 27% increase in Cloud revenue year-over-year.
J.P. Morgan’s Doug Anmuth also shared an optimistic outlook, naming Google one of the firm’s top tech investments, alongside Uber and Amazon, citing encouraging advancements in generative AI as the company approaches its second-quarter earnings announcement. However, Raymond James analyst Josh Beck cautioned that, while the current narrative surrounding Google’s AI is favorable, the long-term impact on sales remains uncertain.