Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will significantly enhance its earnings for the second quarter, as Alphabet, Google’s parent company, prepares to disclose its financial results on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, citing the successful integration of the Gemini AI into Google Cloud and AI Overviews in Google Search as key drivers of sales growth. They expressed optimism about the ongoing incorporation of AI across Google’s platform, noting that a wider rollout of AI Overviews could elevate activity in the core Search business, despite initial challenges that sparked online jokes about its inaccuracies. These analysts raised their price target for Google stock from $200 to $206.
In April, Google reported a substantial 60% profit increase in the first quarter, largely credited to its AI developments, which propelled its stock price and market capitalization beyond the $2 trillion threshold, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s strong performance in the first quarter came after a series of new AI product launches tied to its Gemini AI initiative. Notable highlights from the recent Google I/O developer conference included an advanced AI assistant capable of interfacing through smart glasses, with Google asserting that its latest Gemini AI operates 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious view on the immediate impact of AI Overviews compared to Post and Bansal, he acknowledged the potential for these features to enhance Search monetization over the long haul. He also noted that Google’s Cloud division is already seeing the benefits of AI integration, with expectations of a 27% revenue increase from the previous year.
J.P. Morgan’s Doug Anmuth reinforced this positive outlook, naming Google among the investment firm’s top tech stock picks, alongside Uber and Amazon, citing enthusiasm for GenAI progress leading up to Alphabet’s earnings announcement.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding AI at Google is favorable, the long-term impact on sales remains uncertain.