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. Google’s parent company, Alphabet, is scheduled to release its earnings report after the market closes on Tuesday.
Nvidia’s stock is currently facing one of its most volatile weeks, as it explores new challenges in the market.
Both Bank of America and Wedbush have revised their revenue projections for Google upwards. Analysts Justin Post and Nitin Bansal from Bank of America believe that the integration of the Gemini AI into Google Cloud and the AI Overviews in Google Search will drive sales growth.
In a recent research note, they stated, “We remain positive on growing AI integrations across Google’s ecosystem and think a broader rollout of AI overviews will help drive higher activity in the core Search business.” This optimism comes despite a rocky start for the AI Overviews, which faced some criticism online for making errors. The analysts also increased their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% profit surge in the first quarter, partly due to its AI initiatives. This impressive performance caused its stock price to rise significantly, elevating its market capitalization beyond the $2 trillion mark, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s strong first-quarter showing followed the launch of several new AI products as part of its Gemini AI line. At the recent Google I/O developer conference, the company introduced a futuristic AI assistant that can interact through a user’s smart glasses. Google claims its latest Gemini AI is 20% faster than the latest version of ChatGPT.
Differing slightly from his peers, Wedbush analyst Dan Ives expressed a more cautious outlook on AI Overviews, suggesting they “may become a tailwind for Search monetization over time.” He also noted that AI is already positively impacting Google Cloud’s growth, with expectations of a 27% revenue increase in that sector compared to last year.
Doug Anmuth of J.P. Morgan also shared a positive outlook, ranking Google among the top technology stocks alongside Uber and Amazon, citing “encouragement from GenAI progress” ahead of Alphabet’s upcoming earnings report.
However, Raymond James analyst Josh Beck cautioned that although the current AI narrative surrounding Google is positive, the long-term impact of AI on Google’s sales performance remains uncertain.