Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence (AI) will positively impact its earnings for the second quarter. Alphabet, Google’s parent company, is set to announce its earnings on Tuesday.
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Bank of America’s Justin Post and Nitin Bansal have upgraded their revenue projections for Google, highlighting how the integration of Gemini into Google Cloud and AI Overviews in Google Search could enhance sales. They expressed optimism about the company’s growing AI integrations, believing that a broader rollout of AI overviews might increase activity in the core Search business. Their price target for Google’s stock has been raised from $200 to $206.
In April, Google reported a remarkable profit increase of 60% for the first quarter, largely attributed to its AI developments, which propelled its stock price and market capitalization past the $2 trillion threshold, joining other tech giants like Apple, Microsoft, and Nvidia.
The positive first-quarter results followed a series of new AI product launches, particularly the Gemini AI offerings unveiled at the Google I/O developer conference. These included a future AI assistant designed to interact through smart glasses, which Google claims is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives holds a slightly more cautious view on AI Overviews, he acknowledges that it could eventually benefit Search monetization, noting that AI is already having a favorable impact on Google Cloud. Like his peers, he anticipates a 27% year-over-year increase in Cloud revenue.
J.P. Morgan analyst Doug Anmuth also expressed a positive outlook, naming Google as one of the top tech stocks alongside Uber and Amazon, citing progress in generative AI as promising ahead of Alphabet’s earnings report.
Raymond James analyst Josh Beck cautioned that, despite the current optimism around AI, the long-term effects on Google’s sales remain uncertain.