Analysts from Wedbush, J.P. Morgan, and Bank of America suggest that Google’s advancements in artificial intelligence will contribute positively to its earnings in the second quarter. The parent company of Google, Alphabet, is expected to announce its earnings after the market closes on Tuesday.
Recently, Bank of America analysts, Justin Post and Nitin Bansal, have upgraded their revenue forecasts for Google. They anticipate the integration of Gemini, Google’s AI model, into Google Cloud alongside AI Overviews in Google Search will enhance sales. They stated in a research note that they are optimistic about the expanding AI features across Google’s platform and believe that the wider implementation of AI overviews will stimulate increased activity in the core Search business, despite some early challenges during the rollout that invited internet mockery. They raised their price target for Google’s shares from $200 to $206.
In April, Google reported a 60% profit increase in the first quarter, partly attributed to AI developments, resulting in a significant rise in its stock price and a market capitalization exceeding $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The company’s strong performance in the first quarter followed the release of various artificial intelligence products associated with its Gemini AI division. At the recent Google I/O developer conference, the company unveiled a next-gen AI assistant capable of interfacing through smart glasses. Google claims its latest Gemini AI operates 20% faster than the current iteration of ChatGPT.
While Wedbush analyst Dan Ives was cautious about the immediate effects of AI Overviews, he noted their potential to positively impact Search monetization over time. He also pointed out that AI is already benefiting Google Cloud, expecting a 27% revenue rise for the segment compared to last year.
J.P. Morgan analyst Doug Anmuth shared a similar optimistic view, listing Google among the firm’s top tech stock picks along with Uber and Amazon, citing encouragement from the progress in generative AI as Alphabet awaits its second-quarter earnings announcement.
However, Raymond James analyst Josh Beck cautioned that, despite the positive narrative surrounding AI for Google at present, the long-term impact of AI on the company’s sales remains uncertain.