Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its performance in the upcoming second-quarter earnings report. Alphabet, Google’s parent company, is scheduled to announce its earnings on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, attributing this boost to the integration of the Gemini AI into Google Cloud and AI overviews in Google Search. In a recent research note, they expressed optimism about the positive impact these AI integrations could have on the core Search business, despite some initial challenges when AI overviews were rolled out, which attracted skepticism due to errors and inaccurate information generated by the tool. They have raised their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, largely driven by AI developments, leading to a significant rise in its stock price and elevating its market capitalization above $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
April’s strong earnings came following a series of AI product launches, particularly the Gemini AI tools introduced at the Google I/O developer conference. Among these was a proposed universal AI assistant capable of interacting through smart glasses. Google has claimed that its latest Gemini AI is 20% faster than the current version of ChatGPT.
Dan Ives from Wedbush expressed a more cautious view on the AI Overviews, suggesting they may progressively contribute to Search monetization. He noted, however, that AI is already providing a boost to Google Cloud, predicting a 27% year-over-year revenue increase in that segment.
Doug Anmuth from J.P. Morgan also shared a positive outlook and listed Google alongside Uber and Amazon as one of the top tech stocks, highlighting his optimism regarding progress in generative AI ahead of Alphabet’s earnings announcement.
Josh Beck from Raymond James cautioned that while the current narrative around Google and AI is optimistic, the long-term impact on Google’s sales remains uncertain.