Analysts from Wedbush, J.P. Morgan, and Bank of America suggest that Google’s advancements in artificial intelligence could enhance its earnings for the second quarter. Alphabet, Google’s parent company, is scheduled to release its earnings report on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue projections for Google, attributing the potential boost to the integration of the Gemini AI into Google Cloud and new AI Overviews in the Google Search feature. They expressed optimism about the broader adoption of AI technologies within Google’s ecosystem, believing that enhanced AI overviews could drive user engagement in search activities. Despite initial challenges with AI overviews, which faced criticism for inaccuracies, they have raised their price target for Google’s stock from $200 to $206.
In April, Google saw a remarkable 60% increase in profits during the first quarter, which was significantly influenced by its AI developments. As a result, the company’s stock surged, pushing its market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
This strong performance followed a series of AI product launches under the Gemini label. At Google I/O, the company unveiled plans for a universal AI assistant capable of interacting through smart glasses, asserting that its Gemini AI operates 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious outlook on AI Overviews compared to his peers, he noted that it could eventually support search monetization as AI continues to enhance Google Cloud’s capabilities. He anticipates that Google will report a 27% increase in Cloud revenue year-over-year.
J.P. Morgan’s Doug Anmuth echoed these positive sentiments, highlighting Google as one of the firm’s top tech stock picks alongside Uber and Amazon. He indicated that he and his team are optimistic about the progress in generative AI as they approach the second-quarter earnings report. However, Raymond James analyst Josh Beck cautioned that, despite the current favorable AI narrative, it remains uncertain whether these advancements will lead to sustained long-term sales growth for Google.