Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its second-quarter earnings, with Alphabet set to announce results after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have revised their revenue projections for Google upwards, citing the integration of Gemini into Google Cloud and AI Overviews in Google Search as key factors for expected sales growth. They expressed optimism about the positive impact of AI across Google’s services, despite earlier issues with the AI overviews that drew public mockery due to errors.
In April, Google reported a remarkable 60% increase in profits for the first quarter, attributed in part to its AI initiatives, which led to a rise in its stock price and allowed the company to exceed a market capitalization of $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The company’s strong performance also followed a series of AI product launches, such as a universal AI assistant showcased at the Google I/O developer conference, which is intended to operate with smart glasses. Google asserts that its latest AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed some caution about the AI Overviews potential for immediate impact on revenue, he acknowledged AI’s ongoing benefits for Google Cloud. Collectively, analysts anticipate a 27% year-over-year growth in Cloud revenue for Google.
J.P. Morgan’s Doug Anmuth also conveyed a favorable outlook for the company, identifying Google as a leading tech investment choice alongside Uber and Amazon, and highlighting excitement about the progress in generative AI before Alphabet’s earnings report.
However, Raymond James analyst Josh Beck cautioned that the long-term influence of AI on Google’s sales remains uncertain, despite the currently favorable narrative.