Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its earnings for the second quarter. 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, citing the integration of its Gemini AI into Google Cloud and AI Overviews in Search as key factors for anticipated sales growth. They expressed optimism about the potential benefits of AI within Google’s ecosystem, despite some initial challenges faced during the rollout of AI Overviews, which attracted humorous criticism online for errors. The analysts have adjusted their price target for Google’s stock from $200 to $206.
In its first quarter results released in April, Google reported a remarkable 60% year-on-year profit increase, with artificial intelligence contributing significantly to this growth. This led to a surge in its stock price, elevating the company’s market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The positive results were fueled by a series of new AI product launches, including the unveiling of a universal AI assistant capable of interacting through smart glasses at the Google I/O developer conference. Google asserts that its latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives remains somewhat cautious about the immediate impact of AI Overviews, he noted in a recent research note that it could eventually bolster Search monetization. He also indicated that AI is already positively influencing Google Cloud, projecting a 27% revenue increase in that segment compared to the previous year.
J.P. Morgan’s Doug Anmuth also expressed positive views, recently naming Google as one of its top tech stock picks alongside Uber and Amazon, highlighting the firm’s optimism around advancements in generative AI ahead of Alphabet’s upcoming earnings report. However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding Google’s AI is favorable, the long-term impact of AI on sales remains uncertain.