Analysts from Wedbush, J.P. Morgan, and Bank of America are predicting that Google’s AI advancements will boost its earnings figures for the second quarter. Alphabet, the parent company of Google, is scheduled to release its earnings report on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have updated their revenue projections for Google, citing the integration of the Gemini AI into Google Cloud and AI Overviews within Google Search as factors likely to enhance sales. In a recent research note, they expressed confidence in the ongoing integration of AI across Google’s services, anticipating that the expanded use of AI overviews could lead to increased activity in the company’s core Search segment. While the initial rollout of AI overviews faced some challenges, leading to lighthearted criticism online, Post and Bansal have raised their stock price target for Google from $200 to $206.
In its first-quarter report from April, Google reported a remarkable 60% profit increase, significantly driven by AI contributions, which propelled its stock price and pushed its market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The strong performance in the previous quarter followed a series of new AI product launches as part of Google’s Gemini suite. Notable releases from the recent Google I/O developer conference included a next-generation universal AI assistant capable of interacting through smart glasses, with Google asserting that its latest Gemini model operates 20% faster than the latest version of ChatGPT.
Wedbush analyst Dan Ives expressed a more cautious view regarding AI Overviews, suggesting they may become beneficial for Search monetization over time. He also highlighted that AI is already contributing positively to Google Cloud, predicting a 27% year-over-year growth in Cloud revenue.
J.P. Morgan analyst Doug Anmuth echoed the optimism, naming Google among his firm’s top technology stocks along with Uber and Amazon, and expressing excitement about the advancements in generative AI ahead of Alphabet’s earnings announcement.
Raymond James analyst Josh Beck, while acknowledging the currently positive narrative surrounding Google’s AI, cautioned that the long-term impact of AI on the company’s sales remains uncertain.