Analysts from Wedbush, J.P. Morgan, and Bank of America believe that Google’s advancements in artificial intelligence will boost the company’s earnings for the second quarter. Alphabet, Google’s parent company, is scheduled to release its earnings report on Tuesday.
In light of a new delivery partnership with Uber, shares of Darden Restaurants have surged. Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue projections for Google, crediting the integration of Gemini into Google Cloud and the new AI Overviews in Google Search for anticipated sales growth.
They expressed their optimistic outlook in a research note, stating that increased AI integration within Google’s ecosystem and a broader rollout of AI overviews could enhance user activity in its core Search business, despite some early challenges with the rollout of the AI tool. Consequently, they raised their price target for Google’s stock from $200 to $206.
In April, Google announced a remarkable 60% profit increase for the first quarter, largely attributed to its AI developments. This surge led to a spike in the company’s stock price, allowing its market capitalization to exceed $2 trillion, joining the ranks of tech giants like Apple, Microsoft, and Nvidia.
The strong performance in the first quarter followed a series of AI product launches under the Gemini brand. At the recent Google I/O developer conference, Google unveiled a next-generation AI assistant capable of interacting through smart glasses, claiming it is 20% faster than the latest version of ChatGPT.
While Dan Ives from Wedbush remains cautious about the long-term impact of AI Overviews, he noted that it could support Search monetization over time. He highlighted that AI is already contributing positively to Google Cloud, and like other analysts, he anticipates a 27% year-over-year increase in Cloud revenue.
J.P. Morgan analyst Doug Anmuth has also expressed a positive outlook, identifying Google as one of the firm’s top tech stock picks, alongside Uber and Amazon, and signaling strong confidence in the progress of generative AI prior to Alphabet’s earnings announcement.
However, Josh Beck from Raymond James cautioned that, despite the current favorable AI narrative surrounding Google, the long-term implications for sales growth remain uncertain.