Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s anticipated second-quarter earnings, attributing this positivity to the company’s advancements in artificial intelligence. Alphabet, Google’s parent company, is scheduled to release its earnings report on Tuesday after market hours.
Bank of America analysts Justin Post and Nitin Bansal have updated their revenue forecasts for Google, citing the integration of the Gemini AI platform into Google Cloud and AI Overviews in Google Search as catalysts for increased sales. They noted their confidence in the growing incorporation of AI across Google’s services may enhance user engagement in the core Search segment. However, the rollout of these AI Overviews faced some early criticisms due to inaccuracies that became the subject of online humor. As a result, Post and Bansal have raised Google’s stock price target from $200 to $206.
In the first quarter, Google reported a remarkable 60% profit increase, largely fueled by its AI initiatives. This surge resulted in a significant rise in its stock price, elevating the company’s market capitalization to over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s strong quarterly performance was part of an ongoing rollout of AI products stemming from its Gemini AI initiative. At its recent developer conference, Google I/O, the company unveiled a futuristic AI assistant capable of interacting through smart glasses. Google claims its latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s analyst Dan Ives maintained a cautious outlook on the AI Overviews, suggesting they might become beneficial for Search monetization over time, he acknowledged that AI is already favorably impacting Google Cloud’s performance. Analysts broadly expect Google Cloud to achieve a 27% rise in revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth shared the optimistic perspective, naming Google as one of its top technology stock picks alongside Uber and Amazon, emphasizing encouragement from advances in generative AI. However, Raymond James analyst Josh Beck cautioned that while the current AI narrative is promising, the long-term impact on Google’s sales remains uncertain.