Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advances in artificial intelligence will contribute positively to the company’s earnings in the second quarter, with Alphabet set to announce its earnings following the market close on Tuesday.
Boeing is seeking to raise $19 billion amid challenges related to delivery delays and worker disruptions. Bank of America analysts Justin Post and Nitin Bansal have increased their revenue projections for Google, attributing this to the integration of Gemini into Google Cloud and the AI Overviews feature in Google Search, which they believe will enhance sales.
In a recent research note, they expressed optimism regarding the expansion of AI features within Google’s ecosystem, claiming that an extensive rollout of AI overviews could lead to increased engagement in the core Search business, despite some early challenges when the feature faced criticism online for inaccuracies. Post and Bansal have adjusted their target price for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% rise in profit for the first quarter, largely driven by its AI initiatives, which led to a significant increase in the company’s stock value and helped elevate its market capitalization to over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s strong first-quarter results followed a series of new AI product launches, particularly during the Google I/O developer conference, where they unveiled an advanced AI assistant capable of interacting through smart glasses. Google has claimed that its latest Gemini AI version is 20% faster than ChatGPT.
While Wedbush’s Dan Ives expressed some reservations about the AI Overviews, he noted that it could potentially enhance Search monetization over time. He also highlighted that AI is already having a positive impact on Google Cloud, anticipating a 27% increase in Cloud revenue compared to last year.
J.P. Morgan’s Doug Anmuth shared a similar optimistic outlook, naming Google as one of the firm’s top technology stocks alongside Uber and Amazon, stating that his team is encouraged by the progress in generative AI ahead of Alphabet’s second-quarter earnings report. Conversely, Raymond James analyst Josh Beck cautioned that despite the current positive narrative surrounding AI at Google, the long-term impact on sales remains uncertain.