Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will enhance its second-quarter earnings when Alphabet, Google’s parent company, releases its earnings report after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue projections for Google, citing the integration of the Gemini AI into Google Cloud and AI Overviews in Google Search as key drivers of increased sales. They expressed optimism about the growing role of AI in Google’s operations, believing that a wider application of AI Overviews will elevate engagement within the core Search business. Despite initial issues with the rollout of AI Overviews—which faced criticism for inaccuracies—Post and Bansal have increased their price target for Google’s stock from $200 to $206.
In April, Google announced an impressive 60% profit surge for the first quarter, largely attributed to AI innovations. This strong performance led to a rise in its stock price, boosting the company’s market value over $2 trillion, joining tech giants such as Apple, Microsoft, and Nvidia.
Google’s robust first-quarter results followed numerous new artificial intelligence product launches as part of its Gemini offerings. At its recent developer conference, Google I/O, the company unveiled a next-generation AI assistant capable of interacting through smart glasses. Google has claimed that its latest Gemini AI operates 20% faster than the most current version of ChatGPT.
Although Wedbush’s Dan Ives exhibited a more cautious outlook on AI Overviews than his colleagues, he suggested that these features could eventually support Search monetization. He also noted that AI is already contributing positively to Google Cloud, with expectations of a 27% revenue increase in that sector compared to last year.
J.P. Morgan’s Doug Anmuth shared the optimistic view, naming Google as one of his firm’s top tech stock picks, alongside Uber and Amazon, expressing confidence in the progress of generative AI ahead of Alphabet’s earnings report. However, Raymond James analyst Josh Beck cautioned that the future of AI’s impact on Google’s long-term sales remains uncertain, despite the current positive outlook.