Analysts from Wedbush, J.P. Morgan, and Bank of America suggest that Google’s advancements in artificial intelligence could positively influence its earnings in the second quarter. The parent company, Alphabet, is scheduled to release its earnings report after market close on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue projections for Google, citing the integration of the Gemini AI into Google Cloud and the AI Overviews feature in Google Search as significant contributors to sales growth. Despite a rocky start for the AI Overviews, which faced criticism for inaccuracies, the analysts believe that a wider rollout will enhance engagement within Google’s core Search business. They revised their price target for Google’s stock from $200 to $206.
In April, Google experienced a remarkable 60% profit surge in the first quarter, attributed in part to its AI initiatives, which also led to a rise in its stock price and increased its market capitalization to over $2 trillion, alongside tech giants like Apple, Microsoft, and Nvidia.
Following a series of artificial intelligence product launches, including significant updates announced at the Google I/O developer conference, Google has positioned itself as a leader in AI technology. Its new Gemini AI is claimed to be 20% faster than the latest version of ChatGPT, with aspirations for a future AI assistant capable of interacting through smart glasses.
While Wedbush’s Dan Ives expressed cautious optimism about the potential of AI Overviews, he noted that they might take time to enhance Search monetization. He also affirmed that AI is already making a positive impact on Google Cloud, expecting a 27% revenue increase compared to last year.
J.P. Morgan analyst Doug Anmuth also shared a positive outlook, listing Google among its top tech stock picks, alongside Uber and Amazon, and highlighting the firm’s enthusiasm for advancements in Generative AI as Alphabet prepares for its upcoming earnings report. In contrast, Raymond James analyst Josh Beck warned that it remains uncertain whether AI will contribute to long-term sales growth for Google, despite the current favorable narrative.