Google’s upcoming second-quarter earnings are expected to shine, as indicated by analysts from Wedbush, J.P. Morgan, and Bank of America. The parent company, Alphabet, is scheduled to announce its earnings on Tuesday after the market closes.
Analysts from Bank of America, including Justin Post and Nitin Bansal, have raised their revenue forecasts for Google. They attribute this optimistic outlook to the company’s integration of its Gemini platform into Google Cloud and the AI Overviews feature in Google Search, which they believe will boost sales.
In their research note, the analysts expressed confidence in AI’s increasing role across Google’s ecosystem, suggesting that a wider deployment of AI overviews will enhance activity in the core Search business. This comes despite some initial challenges with the tool, which attracted ridicule online for its inaccuracies. As a result of their bullish perspective, Post and Bansal adjusted their price target for Google stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, partly fueled by advancements in AI. This surge was reflected in a significant rise in the company’s stock price, pushing its market capitalization past $2 trillion, joining the ranks of industry giants like Apple, Microsoft, and Nvidia.
The positive performance in the first quarter followed several months of launching new AI products through its Gemini offerings. Notable announcements made during the Google I/O developer conference included plans for a universal AI assistant capable of interacting through smart glasses. Google has claimed that its latest version of Gemini AI is 20% faster than the newest iteration of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious view regarding the potential of AI Overviews, he acknowledged that they could support Search monetization over time. He emphasized that AI is already making a significant impact on Google Cloud and aligns with Wall Street’s expectation of a 27% year-over-year increase in Cloud revenue.
Doug Anmuth from J.P. Morgan shared a similarly optimistic sentiment, naming Google as one of their top technology stock picks alongside Uber and Amazon, and voiced encouragement regarding the advancements in generative AI ahead of Alphabet’s second-quarter earnings report.
However, analyst Josh Beck from Raymond James cautioned that, while the current narrative surrounding AI for Google is favorable, the long-term impact of these advancements on the company’s sales remains uncertain.