Google’s advancements in artificial intelligence are expected to positively impact its second-quarter earnings, according to analysts from Wedbush, J.P. Morgan, and Bank of America. The parent company Alphabet is scheduled to announce its earnings on Tuesday after market close.
Analysts from Bank of America, including Justin Post and Nitin Bansal, have increased their revenue forecasts for Google, attributing this to the successful implementation of its Gemini AI technology in Google Cloud services and AI Overviews in Google Search. They believe that the expanded use of AI within Google’s ecosystem will enhance engagement in its core Search business, despite initial challenges with the AI Overviews tool that prompted internet criticism. They have revised their price target for Google’s stock from $200 to $206.
In April, Google reported a 60% spike in profits for the first quarter, significantly fueled by its AI innovations. This success led to a rise in its stock price, elevating the company’s market capitalization to over $2 trillion, alongside industry giants such as Apple, Microsoft, and Nvidia.
Following a series of new AI product launches, particularly those associated with the Gemini AI platform, Google showcased a futuristic universal AI assistant at its recent Google I/O developer conference, claiming that its new Gemini AI operates 20% faster than the leading ChatGPT model.
While Wedbush analyst Dan Ives expressed a more cautious outlook on the potential of AI Overviews for immediate monetization, he acknowledged the growing contributions of AI to Google Cloud services. He anticipates a 27% year-over-year increase in Cloud revenue for Google, aligning with the general expectations of Wall Street analysts.
J.P. Morgan analyst Doug Anmuth also shared a positive outlook, categorizing Google among the firm’s top tech investment choices, alongside Uber and Amazon, as they remain optimistic about the company’s generative AI progress prior to the second-quarter earnings announcement.
However, Raymond James analyst Josh Beck cautioned that while the current sentiment surrounding Google’s AI initiatives is favorable, the long-term impact on sales remains uncertain.