Analysts from Wedbush, J.P.Morgan, and Bank of America predict that Google’s recent advancements in artificial intelligence will positively impact its second-quarter earnings, set to be announced Tuesday after the market closes.
Bank of America analysts Justin Post and Nitin Bansal have raised their revenue forecasts for Google, citing the integration of the Gemini AI into Google Cloud and the AI Overviews feature in Google Search as catalysts for increased sales. They believe that the expanded use of AI throughout Google’s services will enhance user engagement in core Search operations, despite early challenges faced by the AI Overviews feature. They have upgraded their stock price target for Google from $200 to $206.
In April, Google reported a remarkable 60% surge in profits during the first quarter, largely attributed to its AI initiatives, resulting in a significant rise in its stock price and boosting its market capitalization above $2 trillion, joining industry giants like Apple, Microsoft, and Nvidia.
Following extensive rollout of its Gemini AI products, Google showcased new capabilities at its recent developer conference, including an advanced universal AI assistant compatible with smart glasses. Google claims its latest iteration of Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed some reservations regarding the immediate impact of AI Overviews on Search monetization, he acknowledged the growing influence of AI in enhancing Google Cloud services. He, along with other analysts, projects a 27% year-over-year revenue increase for Google Cloud.
J.P. Morgan’s Doug Anmuth also echoed the optimistic outlook, listing Google among the firm’s top technology stock recommendations alongside Uber and Amazon, and expressed enthusiasm about the company’s generative AI developments ahead of the earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding Google’s AI is positive, the long-term impact on the company’s sales remains uncertain.