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 report, which is due after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have revised their revenue forecasts for Google, citing the integration of Gemini into Google Cloud and new AI features in Google Search as key factors for enhanced sales. They noted, “We remain positive on growing AI integrations across Google’s ecosystem and think a broader rollout of AI overviews will help drive higher activity in the core Search business,” despite some initial challenges during the deployment of these AI tools.
Post and Bansal have increased their price target for Google’s stock from $200 to $206. This comes on the heels of Google reporting a remarkable 60% profit surge in the first quarter, largely attributed to its AI innovations, which propelled its market cap beyond $2 trillion, aligning it with other tech giants like Apple, Microsoft, and Nvidia.
The impressive first-quarter results followed extensive launches of new AI products under its Gemini AI initiative, including features introduced at Google’s developer conference, Google I/O. The company has touted its Gemini AI as being 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed some caution regarding AI Overviews, he acknowledged their potential to aid search monetization over time. He also remarked that AI is already creating a positive impact on Google Cloud, predicting a 27% increase in Cloud revenue year-over-year.
J.P. Morgan analyst Doug Anmuth shared an optimistic view, identifying Google as one of the firm’s top tech stock picks alongside Uber and Amazon, and expressing confidence in the progress of generative AI ahead of Alphabet’s earnings announcement.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding Google’s AI developments is favorable, the long-term implications on sales remain uncertain.