Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s upcoming second-quarter earnings, attributing their positive outlook to the company’s advancements in artificial intelligence. Alphabet, Google’s parent company, is scheduled to announce its earnings after the market closes on Tuesday.
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Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue projections for Google, noting that the integration of the Gemini AI system into Google Cloud and the introduction of AI Overviews in Google Search are expected to enhance sales. They expressed confidence in the ongoing AI integrations within Google’s ecosystem and anticipate that a broader rollout of AI Overviews will increase activity in the core Search business. Despite initial setbacks during the rollout of these AI tools, which faced criticism for inaccuracies, Post and Bansal have increased their price target for Google’s stock from $200 to $206.
In the first quarter, Google reported a remarkable 60% profit surge, largely driven by AI, resulting in a significant rise in its stock price and elevating its market capitalization beyond $2 trillion, alongside companies like Apple, Microsoft, and Nvidia.
Following the introduction of new AI products as part of the Gemini offerings, including an advanced universal AI assistant showcased at the Google I/O developer conference, the company continues to innovate. Google claims its latest Gemini AI is 20% faster than the most recent version of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious view on the AI Overviews than his colleagues, he believes the feature could eventually support revenue growth from Search. He also asserted that AI is already positively impacting Google Cloud, anticipating a 27% revenue increase for the division compared to the previous year.
J.P. Morgan analyst Doug Anmuth echoed this optimism, identifying Google as one of the firm’s top tech stock recommendations, along with Uber and Amazon, citing encouragement from their advancements in generative AI ahead of the upcoming earnings report.
However, Raymond James analyst Josh Beck cautioned that although the current narrative surrounding Google’s AI developments is favorable, the long-term impact on sales remains uncertain.