Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s recent advancements in artificial intelligence will positively impact its second-quarter earnings, with the parent company Alphabet set to announce results post-market on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have revised their revenue projections for Google, citing the integration of the Gemini AI into Google Cloud and AI overviews in Google Search as key factors driving sales. They expressed optimism about these developments, despite initial setbacks in the AI overview rollout, which faced criticism online for its inaccuracies. Consequently, they have adjusted their price target for Google stocks from $200 to $206.
In April, Google reported an impressive 60% profit increase in the first quarter, largely credited to AI innovations, which led to a surge in its stock price and elevated the company’s market capitalization past the $2 trillion mark, joining tech giants Apple, Microsoft, and Nvidia.
Google’s strong performance in the first quarter followed a wave of AI product launches, particularly those related to its Gemini AI suite. Recent announcements at Google I/O highlighted a next-generation AI assistant capable of interacting through smart glasses, with Google claiming this new version of Gemini AI outperforms the latest ChatGPT by 20%.
Dan Ives of Wedbush expressed a more cautious view on AI overviews compared to Post and Bansal, stating that it could eventually support monetization efforts for Search. Nonetheless, he noted that AI is already enhancing Google Cloud’s performance, forecasting a 27% revenue increase in this sector year-over-year.
J.P. Morgan analyst Doug Anmuth shared similar optimistic sentiments, naming Google one of their top technology stock picks alongside Uber and Amazon, and expressed enthusiasm over the advancements in generative AI leading up to Alphabet’s earnings announcement.
However, Raymond James analyst Josh Beck cautioned that while current trends regarding AI seem promising for Google, the long-term impact on sales remains uncertain.