Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will contribute positively to its earnings report for the second quarter. Alphabet, Google’s parent company, is scheduled to release its earnings after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have optimistic revenue predictions for Google, citing the integration of the Gemini AI system into Google Cloud and the AI Overviews feature in Google Search as significant factors likely to enhance sales.
In a recent research note, the analysts expressed confidence in the increasing integration of AI throughout Google’s platforms, which they believe will generate greater user engagement in the core Search business, despite some initial setbacks with the AI Overviews tool. They have adjusted their stock price forecast for Google from $200 to $206.
In April, Google reported a remarkable 60% profit increase for the first quarter, driven in part by its AI initiatives. This performance resulted in a surge in its stock price, elevating the company’s market capitalization beyond $2 trillion, alongside tech giants like Apple, Microsoft, and Nvidia.
The strong first quarter was a result of various new artificial intelligence products, particularly those from Google’s Gemini offerings. Notable features unveiled at the recent Google I/O developer conference included a futuristic universal AI assistant capable of interacting through smart glasses. Google asserts that its latest Gemini AI is now 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives was somewhat less optimistic about the immediate impact of AI Overviews, he acknowledged their potential to enhance Search monetization in the future. He also noted the positive effect of AI on Google Cloud, predicting a 27% increase in Cloud revenue year-over-year.
J.P. Morgan analyst Doug Anmuth expressed similar positive sentiments, recognizing Google as one of the firm’s top technology stock picks, alongside Uber and Amazon, due to strong advancements in Generative AI ahead of Alphabet’s upcoming earnings announcement.
However, Raymond James analyst Josh Beck cautioned that despite the current positive narrative surrounding AI’s impact on Google, the long-term potential for AI to significantly boost sales remains uncertain.