Analysts from Wedbush, J.P. Morgan, and Bank of America believe that Google’s advancements in artificial intelligence will enhance its second-quarter earnings. Alphabet, Google’s parent company, is expected to announce its earnings on Tuesday.
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Bank of America analysts Justin Post and Nitin Bansal have revised their revenue forecasts for Google, crediting the integration of the Gemini AI into Google Cloud and enhanced AI Overviews in search results for the anticipated boost in sales. They noted a positive outlook on AI implementations across Google’s platform, suggesting that expanded use of AI overviews could increase user engagement in the core Search business. This comes despite initial setbacks in the AI overview rollout, which faced criticism for producing inaccuracies. Post and Bansal have increased their price target for Google’s stock from $200 to $206.
In its first quarter, Google saw a remarkable 60% profit increase, partially driven by AI advancements, leading to a surge in its stock price and pushing the company’s market cap beyond $2 trillion—joining the ranks of Apple, Microsoft, and Nvidia.
Following the debut of its Gemini AI products, Google showcased a range of new features at its I/O developer conference, including an advanced AI assistant designed to interact through smart glasses. Google alleges that its newest Gemini AI is 20% faster than the latest version of ChatGPT.
While Dan Ives from Wedbush expressed a more cautious view on AI Overviews compared to his colleagues at Bank of America, he noted the potential for these features to support Search monetization in the future. Additionally, Ives highlighted the positive impact of AI on Google Cloud revenue, predicting a 27% increase compared to last year.
Doug Anmuth from J.P. Morgan also shared a positive outlook, naming Google among the top tech investment opportunities alongside Uber and Amazon. He expressed optimism regarding the progress in Generative AI ahead of Alphabet’s earnings report.
However, analyst Josh Beck from Raymond James cautioned that while the current AI narrative is optimistic, the long-term impact on Google’s sales driven by AI remains uncertain.