Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s integration of artificial intelligence will positively impact its second-quarter earnings. Alphabet, Google’s parent company, is set to release its earnings report after market close on Tuesday.
Bank of America’s analysts, Justin Post and Nitin Bansal, have raised their revenue forecasts for Google, citing the successful incorporation of the Gemini AI system into Google Cloud and AI features in Google Search as key drivers for increased sales. In a recent research note, they expressed optimism about the ongoing growth of AI applications within Google, suggesting that expanded deployment of AI features could enhance activity in its core Search business. Despite some initial challenges with AI features producing inaccurate results, they have increased their price target for Google’s stock from $200 to $206.
In April, Google announced a remarkable 60% profit increase in the first quarter, largely attributed to its advancements in AI, which propelled its stock price and pushed its market capitalization above $2 trillion, joining the ranks of tech giants like Apple, Microsoft, and Nvidia.
This strong performance found its roots in a series of new AI product releases as part of Google’s Gemini offerings. The latest innovations showcased at the Google I/O developer conference included an advanced universal AI assistant capable of interacting through smart glasses, and Google claims that its Gemini AI operates 20% quicker than the latest iteration of ChatGPT.
While Wedbush’s Dan Ives expressed more caution regarding the potential of AI features in Search monetization, he acknowledged that AI is already having a favorable impact on Google Cloud. Analysts broadly expect Google to report a 27% rise in Cloud revenue compared to the previous year.
Doug Anmuth from J.P. Morgan also shared an optimistic outlook, identifying Google as one of the firm’s top technology stock picks, alongside Uber and Amazon, and indicated positivity regarding advancements in generative AI as the company approaches its second-quarter earnings report. However, Josh Beck from Raymond James cautioned that while the current AI narrative regarding Google is encouraging, the long-term effects on sales remain uncertain.