Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s artificial intelligence advancements will significantly enhance the company’s second-quarter earnings. Alphabet, Google’s parent company, is scheduled to release its earnings report after market close on Tuesday.
In recent evaluations, Bank of America and Wedbush analysts have increased their revenue forecasts for Google. They believe that integrating the Gemini AI into Google Cloud and enhancing AI Overviews in Google Search will be beneficial for sales.
In a research note released last week, analysts Justin Post and Nitin Bansal expressed their optimism about the growing role of AI across Google’s platform, noting that a wider deployment of AI Overviews could increase engagement in the core Search business. This sentiment persists despite initial challenges during the launch of AI Overviews that led to some humorous online reactions due to inaccuracies. They have adjusted their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, partially attributed to AI developments, which propelled its stock price and pushed its market capitalization above $2 trillion, aligning it with industry giants like Apple, Microsoft, and Nvidia.
Google’s successful quarter followed months of new AI product launches, including those from its Gemini AI initiative. At the Google I/O developer conference, the company introduced a futuristic universal AI assistant capable of interacting through smart glasses, claiming its latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious outlook on AI Overviews compared to his colleagues, he noted that these tools could eventually benefit Search monetization. He also highlighted that AI is already enhancing Google Cloud, predicting a 27% year-over-year revenue growth in that sector, in line with Wall Street expectations.
J.P. Morgan’s Doug Anmuth reinforced the positive outlook, designating Google as one of the firm’s top tech picks alongside Uber and Amazon, citing encouraging developments in generative AI before Alphabet’s earnings announcement.
Raymond James analyst Josh Beck, however, cautioned that while the current narrative around AI for Google appears favorable, its long-term impact on sales remains uncertain.