Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s developments in artificial intelligence will enhance its second-quarter earnings. Alphabet, Google’s parent company, is scheduled to announce its earnings on Tuesday.
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Bank of America analysts Justin Post and Nitin Bansal have raised their revenue forecasts for Google, attributing this to the integration of the Gemini AI system into Google Cloud and AI features in Google Search. They expressed optimism in a research note by stating, “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 earlier issues with the AI overviews generating errors and inaccuracies. They have adjusted their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, largely driven by AI advancements. This success led to a significant rise in its stock price, pushing the company’s market capitalization beyond the $2 trillion threshold, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s strong first-quarter results followed several launches of new AI products under its Gemini AI initiative. Notable announcements at the recent Google I/O developer conference included a next-generation universal AI assistant capable of interacting through smart glasses. Google claims its latest Gemini AI operates 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious outlook regarding AI Overviews compared to Post and Bansal, he noted in a Monday report that it could eventually aid in increasing Search monetization. He also highlighted AI’s current positive impact on Google Cloud, projecting a 27% increase in Cloud revenue year-over-year.
J.P. Morgan’s Doug Anmuth confirmed a similar positive stance, naming Google among the top tech stocks alongside Uber and Amazon, and expressing optimism about progress in generative AI ahead of Alphabet’s second-quarter earnings announcement. However, Raymond James analyst Josh Beck cautioned that, despite the favorable current narrative surrounding AI, the long-term impact on Google’s sales remains uncertain.