Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings, with Alphabet, Google’s parent company, set to report its earnings on Tuesday.
Both Bank of America and Wedbush have upgraded their revenue forecasts for Google. The analysts at Bank of America, Justin Post and Nitin Bansal, believe that integrating the Gemini AI system into Google Cloud and the implementation of AI Overviews in Google Search will enhance sales performance.
In a recent research note, they expressed optimism about the ongoing AI integrations across Google’s ecosystem, stating that wider distribution of AI Overviews is likely to drive increased activity in the core Search business. This optimism persists despite early challenges with the AI Overviews rollout, which faced criticism online for producing errors. Post and Bansal have increased their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase for the first quarter, largely due to its AI initiatives, which propelled its stock price and market capitalization beyond $2 trillion, placing it alongside Apple, Microsoft, and Nvidia.
Google’s successful first-quarter results came on the heels of numerous artificial intelligence product launches as part of its Gemini AI offerings. At the Google I/O developer conference, the company unveiled a universal AI assistant capable of interacting through smart glasses, claiming its latest Gemini AI is 20% faster than the most recent version of ChatGPT.
Wedbush analyst Dan Ives is slightly more cautious regarding the AI Overviews than Post and Bansal; however, he noted in a research note that these overviews might support Search monetization in the long run. Ives also pointed out that AI is already enhancing Google Cloud, expecting a 27% year-over-year increase in Cloud revenue.
Doug Anmuth from J.P. Morgan also echoed a favorable view, identifying Google among the firm’s top tech stock picks, alongside Uber and Amazon. He expressed confidence in the company’s progress in generative AI as it approaches its second-quarter earnings report.
Meanwhile, analyst Josh Beck from Raymond James cautioned that while the current narrative surrounding AI at Google is encouraging, the long-term impact of AI on sales remains uncertain.