Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings, with Alphabet scheduled to release its earnings report on Tuesday.
Both Bank of America’s Justin Post and Nitin Bansal have raised their revenue projections for Google. They believe the integration of the Gemini AI into Google Cloud, as well as AI Overviews in Google Search, will enhance sales. They expressed confidence in the potential of AI to drive increased activity in Google’s core Search business, despite some initial challenges with the rollout of AI Overviews, which encountered issues and prompted online humor due to inaccuracies.
In their analysis, they adjusted their price forecast for Google’s stock from $200 to $206. Previously, in April, Google reported a remarkable 60% profit increase in the first quarter, largely attributed to its AI advancements, causing the company’s stock to surge and its market capitalization to exceed $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s positive performance in the first quarter followed an array of new AI product launches, including ambitious features showcased at the Google I/O developer conference, such as an advanced AI assistant capable of interacting through smart glasses. The latest version of Google’s Gemini AI is claimed to be 20% faster than the latest iteration of ChatGPT.
While Wedbush’s Dan Ives remained cautious about the potential of AI Overviews, he acknowledged that it could provide support for Search monetization in the future. He also noted that AI is already yielding benefits for Google Cloud, forecasting a 27% year-over-year revenue increase in that segment.
J.P. Morgan analyst Doug Anmuth shared a similarly optimistic view, identifying Google among the top technology stocks, alongside Uber and Amazon, and highlighting the progress in generative AI in anticipation of Alphabet’s upcoming quarterly earnings report.
However, Raymond James analyst Josh Beck voiced a word of caution, suggesting that while the current narrative surrounding Google’s AI developments is positive, the long-term impact on Google’s sales due to AI remains uncertain.