Analysts from Wedbush, J.P. Morgan, and Bank of America believe that Google’s advancements in artificial intelligence are set to positively impact its second-quarter earnings report, which is expected after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have raised their revenue forecasts for Google, pointing to the integration of its Gemini AI into Google Cloud and AI Overviews in Google Search as key drivers of growth. They remain optimistic about the ongoing AI integrations across Google’s ecosystem, asserting that a more extensive implementation of AI Overviews will enhance user engagement in the Search business. Despite some initial setbacks in the AI Overview rollout that led to public ridicule over inaccuracies, the analysts have increased their target price for Google’s stock from $200 to $206.
In its previous quarter, Google reported a remarkable 60% profit increase, significantly attributed to AI advancements, which propelled its stock price and boosted its market capitalization over $2 trillion, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
Google has consistently launched new artificial intelligence products, particularly through its Gemini AI initiative. Notably, at the Google I/O developer conference, the company introduced a futuristic universal AI assistant capable of interacting through smart glasses. Google claims its latest Gemini model operates 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious view on the potential of AI Overviews compared to Post and Bansal, he acknowledged that it could eventually support Search monetization. Ives also noted that AI is currently enhancing Google Cloud services and projected a 27% year-over-year increase in Cloud revenue.
J.P. Morgan’s Doug Anmuth shared a similar positive outlook and identified Google as one of the top tech stocks for investment, alongside Uber and Amazon, highlighting an encouraging trajectory in generative AI ahead of Alphabet’s earnings announcement.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding AI and Google appears optimistic, the long-term impact of AI on Google’s sales remains uncertain.