Analysts from Wedbush, J.P. Morgan, and Bank of America are anticipating that Google’s upcoming second-quarter earnings report will be positively impacted by the company’s advancements in artificial intelligence. Alphabet, Google’s parent company, is scheduled to release its earnings after market hours on Tuesday.
Recent reports indicate that Bank of America analysts Justin Post and Nitin Bansal have increased their revenue projections for Google. They believe that the integration of the Gemini AI system into Google Cloud, along with the AI Overviews feature in Google Search, will enhance sales. They expressed confidence that these AI enhancements will promote increased user engagement in the core Search business, even though the initial rollout of AI Overviews faced challenges and occasional errors that have drawn humorous criticism online. As a result, the analysts have adjusted their price target for Google’s stock from $200 to $206.
In April, Google revealed a remarkable 60% profit increase for the first quarter, largely attributed to its AI initiatives, which propelled its stock price and raised the company’s market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The positive momentum for Google is bolstered by a series of AI product releases, including features showcased at the Google I/O developer conference, which introduced a future AI assistant capable of interacting with users through smart glasses. Google asserts that its latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed a slightly more cautious view regarding AI Overviews, he acknowledged that the advancements in AI are already benefiting Google Cloud. He, along with other Wall Street analysts, anticipates a 27% year-over-year growth in Cloud revenue for Google.
J.P. Morgan’s Doug Anmuth reaffirmed a positive outlook on Google, positioning it alongside Uber and Amazon as one of the top tech stock picks, noting enthusiasm regarding General AI advancements ahead of Alphabet’s second-quarter earnings announcement.
However, Raymond James analyst Josh Beck cautioned that while the current AI narrative surrounding Google is encouraging, the long-term impact of AI on driving steady sales growth remains uncertain.
In summary, as Google navigates the rapidly evolving landscape of AI technology, the optimism expressed by these analysts illustrates the potential of AI to reshape its business model. With strong performance trends and strategic innovations, Google appears well positioned for future growth, potentially marking a new era in its financial success.