Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s upcoming second-quarter earnings, attributing potential growth to the company’s advancements in artificial intelligence. Alphabet, Google’s parent company, is expected to release its earnings report after market close on Tuesday.
Bank of America’s analysts, Justin Post and Nitin Bansal, have raised their revenue forecasts for Google, crediting the integration of its Gemini AI into Google Cloud and AI features in Google Search for the expected boost in sales. They expressed confidence in the potential of AI to enhance user engagement in Search, despite initial challenges with the AI overview tool, which faced criticism for inaccuracies. They increased their price target for Google’s stock from $200 to $206.
In its first quarter, Google reported a remarkable 60% rise in profits, significantly attributed to its AI developments. This impressive performance led to a surge in its stock price, elevating its market cap beyond $2 trillion, positioning it alongside industry giants like Apple, Microsoft, and Nvidia.
Google has been actively releasing new AI products as part of its Gemini offerings, highlighted by its announcement at the recent Google I/O developer conference. Among the new features is a universal AI assistant designed to interact with users through smart glasses, with Google claiming this latest version of Gemini is 20% faster than the latest ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious outlook on the long-term effects of AI Overviews, he acknowledged potential benefits for Search monetization over time. He noted that AI is already making a positive impact on Google Cloud, forecasting a 27% increase in Cloud revenue from the previous year.
J.P. Morgan’s Doug Anmuth shared a similarly positive outlook, naming Google among the top technology stocks, alongside Uber and Amazon, and expressing optimism for the advancements in generative AI leading up to the earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current sentiment around Google’s AI efforts is optimistic, the long-term impact on sales remains uncertain.