Analysts from Wedbush, J.P. Morgan, and Bank of America have predicted that Google’s advancements in artificial intelligence could lead to a positive outlook for the company’s second-quarter earnings report, which is expected after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have raised their revenue expectations for Google, highlighting the integration of the Gemini AI into Google Cloud and AI Overviews in Google Search as key factors that will enhance sales. They expressed optimism about the growing role of AI within Google’s ecosystem and believe that a wider implementation of AI Overviews could increase user engagement in the core Search business. Despite some initial problems with the AI Overviews tool, which faced criticism online for errors, the analysts have adjusted their price target for Google’s stock from $200 to $206.
In April, Google announced a remarkable 60% increase in profits for the first quarter, attributing part of this success to its AI innovations. This financial boost has pushed Google’s market value beyond the $2 trillion mark, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s impressive performance followed several new product launches related to its Gemini AI initiatives. At the recent Google I/O developer conference, the company unveiled a futuristic universal AI assistant designed to interact via smart glasses. Notably, Google claims that its latest Gemini AI operates 20% faster than the newest version of ChatGPT.
While Wedbush analyst Dan Ives was more cautious regarding the AI Overviews than Post and Bansal, he stated in a note that they could provide a beneficial effect on Search monetization over time. He noted that AI is already driving growth in Google Cloud, and many analysts anticipate that the Cloud revenue will see a 27% year-over-year increase.
Meanwhile, J.P. Morgan analyst Doug Anmuth expressed positive sentiments towards Google, naming it one of the firm’s top tech stock picks alongside Uber and Amazon, and noted excitement about progress in Generative AI as Alphabet approaches its second-quarter earnings report. Raymond James analyst Josh Beck, however, cautioned that while the current AI narrative for Google seems favorable, the long-term impact of AI on sales remains uncertain.