Google’s advancements in artificial intelligence are expected to positively impact its second-quarter earnings, according to analysts from Wedbush, J.P. Morgan, and Bank of America. The company, which operates under the parent name Alphabet, is scheduled to announce its earnings on Tuesday after market hours.
Analysts from Bank of America, including Justin Post and Nitin Bansal, have raised their revenue forecasts for Google, attributing this to the integration of its Gemini AI into Google Cloud and the new AI Overviews feature in Google Search, which they believe will enhance sales. They noted in a recent research report that the widespread implementation of AI tools is anticipated to increase user engagement on the core Search platform, despite some initial implementation challenges that had led to online criticism due to inaccuracies.
In its first quarter earnings report in April, Google saw earnings increase by 60%, partially driven by its AI initiatives, which led to a significant rise in its stock price and propelled its market valuation beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The success of Google’s first-quarter performance came after months of launching various new AI products as part of the Gemini AI suite. At Google’s major developer event, Google I/O, the company unveiled a new universal AI assistant that could interact via smart glasses. Notably, Google claims its latest Gemini AI is 20% faster than the most recent version of ChatGPT.
Wedbush analyst Dan Ives expressed a more cautious view on the potential of AI Overviews, suggesting that while it may eventually boost revenue from Search, its impact might not be immediate. He also highlighted that AI has already positively influenced Google Cloud, projecting a 27% growth in Cloud revenue compared to the previous year.
Similarly, J.P. Morgan’s Doug Anmuth stated that Google was among the investment firm’s top tech stock picks alongside Uber and Amazon, citing optimism regarding the progress of Generative AI in advance of Alphabet’s upcoming earnings report.
However, Raymond James analyst Josh Beck cautioned that despite the current positive sentiment surrounding AI at Google, it remains uncertain whether these technologies will significantly increase sales in the long term.