Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings report, set to be released after market close on Tuesday.
Bank of America’s Justin Post and Nitin Bansal have increased their revenue projections for Google, noting that the integration of the Gemini AI technology into Google Cloud and AI Overviews in Google Search is expected to enhance sales. They expressed continued optimism about the expanding AI features throughout Google’s ecosystem, believing that a wider deployment of AI Overviews could elevate activity in Google’s core Search operations. This comes despite some early challenges with the rollout of AI Overviews, which faced criticism online for inaccuracies. Consequently, Post and Bansal raised their stock price target for Google from $200 to $206.
In its first-quarter earnings reported in April, Google experienced a remarkable 60% rise in profits, largely attributed to AI developments, leading to a significant increase in stock value and pushing the company’s market capitalization beyond $2 trillion, joining tech giants like Apple, Microsoft, and Nvidia.
Google’s robust first-quarter results were influenced by numerous artificial intelligence product launches linked to its Gemini AI suite. At its recent developer conference, Google I/O, the company showcased a future AI assistant capable of visual and verbal interaction through smart glasses, claiming its Gemini AI operates 20% faster than the latest version of ChatGPT.
Dan Ives from Wedbush expressed some caution regarding AI Overviews’ immediate impact compared to the optimistic predictions of Post and Bansal, suggesting they might support Search monetization over time. Ives noted that AI is already benefiting Google Cloud and, like his peers, anticipates a 27% rise in Cloud revenue year-over-year.
Furthermore, Doug Anmuth of J.P. Morgan echoed the positive outlook, listing Google among its top tech investment picks, alongside Uber and Amazon, citing excitement about the company’s generative AI advancements ahead of the upcoming earnings announcement.
Raymond James analyst Josh Beck cautioned that while the current sentiment surrounding Google’s AI initiatives is encouraging, the long-term impact on sales remains uncertain.