Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively impact its upcoming second-quarter earnings, which will be reported after the market closes on Tuesday.
Bank of America’s analysts, Justin Post and Nitin Bansal, have increased their revenue forecasts for Google, crediting its Gemini integration into Google Cloud and AI Overviews in Google Search for anticipated sales growth. They expressed optimism about the expanding AI features across Google’s platform and believe that enhanced AI overviews will likely increase user engagement in the core Search business. Despite initial setbacks with AI Overviews—which faced criticism for inaccuracies—Post and Bansal have adjusted their stock price target for Google from $200 to $206.
In its first quarter, Google reported a remarkable 60% rise in profits, partially attributed to its AI initiatives. This growth propelled its stock price upward, elevating the company’s market value above $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google has been releasing numerous AI innovations as part of its Gemini offerings, with its latest announcements at the Google I/O developer conference featuring an AI assistant designed to operate through smart glasses. The company asserts its latest iteration of Gemini AI operates 20% faster than the current ChatGPT.
While Wedbush’s Dan Ives is cautiously optimistic about the potential for AI Overviews to enhance Search monetization, he notes that AI is already contributing positively to Google Cloud’s growth, with expectations of a 27% revenue increase compared to last year.
Similarly, J.P. Morgan’s Doug Anmuth identified Google as a priority tech investment, alongside Uber and Amazon, highlighting his team’s encouragement regarding advancements in generative AI before Alphabet’s earnings report.
However, analyst Josh Beck from Raymond James cautioned that, despite the favorable current narrative around AI, it remains uncertain whether these technologies will lead to sustained long-term sales growth for Google.