Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively influence its second-quarter earnings, which are set to be announced after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue forecasts for Alphabet, the parent company of Google, highlighting the impact of the integration of the Gemini AI into Google Cloud and AI Overviews in the Search function. They expressed optimism that the expansion of AI features will increase activity in Google’s core Search business, despite some initial challenges with AI Overviews, which faced criticism online. They have also raised their price target for Google shares from $200 to $206.
In its first quarter, Google reported a significant profit increase of 60%, attributed in part to AI developments, leading to a surge in its stock price and a market valuation exceeding $2 trillion, placing it alongside tech giants such as Apple, Microsoft, and Nvidia.
This strong performance follows a series of AI product launches related to the Gemini AI suite, with Google’s recent developer conference unveiling an advanced AI assistant designed for smart glasses. Google asserts that its latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives is somewhat cautious about the immediate impact of AI Overviews, he nonetheless believes it could be beneficial for Search monetization in the long run. He also pointed out that AI applications are already enhancing Google Cloud services, predicting a 27% year-over-year increase in Cloud revenue.
J.P. Morgan analyst Doug Anmuth shared a positive outlook on Google, listing it among the firm’s top technology stocks alongside Uber and Amazon, and expressing confidence in the progress of generative AI ahead of Alphabet’s earnings report. Conversely, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding AI at Google is promising, it remains to be seen whether these advancements will sustain long-term sales growth.