Analysts from Wedbush, J.P. Morgan, and Bank of America project that Google’s advancements in artificial intelligence (AI) will positively impact its earnings for the second quarter. Google’s parent company, Alphabet, is expected to announce its earnings on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have elevated their revenue forecasts for Google, attributing the anticipated sales boost to the integration of its Gemini AI technology within Google Cloud and AI features in Google Search. They expressed their optimism in a recent research note, stating, “We remain positive on growing AI integrations across Google’s ecosystem and think a broader rollout of AI overviews will help drive higher activity in the core Search business,” despite some early issues with the AI tool that led to public jokes about its inaccuracies. Consequently, they raised their price target for Google’s stock from $200 to $206.
In its first-quarter report for April, Google revealed a remarkable profit increase of 60%, partly driven by AI innovations, which resulted in a stock price surge that elevated the company’s market capitalization to over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Following months of AI product releases, including innovations presented at the Google I/O developer conference, such as a universal AI assistant designed for smart glasses, Google’s performance reflects its growing AI capabilities. The latest version of its Gemini AI is reported to be 20% faster than the newest ChatGPT.
While Wedbush analyst Dan Ives expressed a slightly less optimistic view on AI overviews, he noted in a Monday research note that it could serve as a support for Search monetization in the long run. He also remarked that AI is already positively impacting Google Cloud, predicting a 27% revenue growth in that segment compared to the previous year.
J.P. Morgan analyst Doug Anmuth recently included Google among the top technology stocks, alongside Uber and Amazon, citing his team’s encouragement regarding the progress in generative AI ahead of Alphabet’s upcoming earnings report. However, Raymond James analyst Josh Beck cautioned that while the current narrative around Google’s AI is favorable, the long-term effects on sales remain uncertain.