Analysts from Wedbush, J.P. Morgan, and Bank of America believe that Google’s advancements in artificial intelligence will enhance its earnings for the second quarter. Google’s parent company, Alphabet, is expected to release its earnings report on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, suggesting that the incorporation of Gemini into Google Cloud and AI Overviews in Search will boost sales. They expressed optimism about the expanding AI features within Google’s ecosystem, predicting that a wider implementation of AI overviews would elevate activity in the core Search sector. Despite some initial challenges with the AI tool being ridiculed online for inaccuracies, they adjusted their stock price target for Google from $200 to $206.
In the first quarter, Google reported a significant profit increase of 60%, aided by AI, which drove its stock price upwards and pushed its market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The company’s strong earnings were a result of new AI product launches under its Gemini AI line, including an innovative universal AI assistant showcased at the Google I/O developer conference. Google claims its latest Gemini AI operates 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives had less enthusiasm about the AI Overviews than his colleagues, he noted that it could support Search monetization in the future. He also acknowledged that AI is already positively influencing Google Cloud’s revenue, anticipating a 27% increase compared to last year.
Doug Anmuth from J.P. Morgan echoed the optimistic outlook, identifying Google as one of the firm’s top technology stocks alongside Uber and Amazon, highlighting encouraging developments in generative AI ahead of Alphabet’s earnings announcement.
However, Raymond James analyst Josh Beck cautioned that while the current buzz around AI is promising for Google, its long-term impact on sales remains uncertain.