Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its earnings for the second quarter, with Alphabet expected to disclose its earnings after trading on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue forecasts for Google, attributing potential sales boosts to the integration of Gemini into Google Cloud and new AI functions in Google Search. They expressed optimism in a recent research note, stating that broader use of AI will likely stimulate activity in Google’s core Search business, despite some early issues with the AI overview tool being mocked online for its inaccuracies. They adjusted their price target for Google stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, driven in part by its AI advancements, which helped elevate its stock price and push its market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The company’s strong performance followed a series of new AI product launches, including an ambitious universal AI assistant showcased at the Google I/O developer conference, which is designed to interact through smart glasses. Google claims its latest Gemini AI is significantly faster than the recent version of ChatGPT.
While Wedbush’s Dan Ives expressed caution regarding AI Overviews, he acknowledged that it could eventually benefit search ad revenue. He also highlighted ongoing positive effects from AI on Google Cloud, with many analysts expecting a 27% increase in Cloud revenue compared to last year.
J.P. Morgan analyst Doug Anmuth mirrored the optimistic outlook by naming Google among the firm’s top tech stock recommendations, alongside Uber and Amazon, as he noted promising advancements in generative AI ahead of the earnings announcement. However, Raymond James analyst Josh Beck cautioned that, while current sentiments about AI’s impact on Google are favorable, its long-term effects on revenue remain to be seen.