Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its performance in the upcoming second-quarter earnings report. Alphabet, Google’s parent company, is expected to announce its earnings on Tuesday.
Bank of America and Wedbush have increased their revenue projections for Google, citing the integration of Gemini into Google Cloud and the introduction of AI Overviews in Google Search as key drivers of sales growth. Justin Post and Nitin Bansal from Bank of America noted in a recent research report that the expansion of AI features across Google’s platform is likely to increase user engagement in its core Search business, despite some initial challenges with AI Overviews which drew criticism online. They have adjusted their stock price forecast for Google from $200 to $206.
In April, Google reported a remarkable 60% rise in profits for the first quarter, with AI playing a significant role in this success. This performance contributed to a surge in the company’s stock price and pushed its market value past the $2 trillion mark, placing it among tech giants like Apple, Microsoft, and Nvidia.
Following several months of AI product launches, including advancements showcased at the Google I/O developer conference, the company announced its latest Gemini AI features, which they claim are significantly faster than competing technologies.
Dan Ives from Wedbush expressed a more cautious outlook on the potential of AI Overviews but acknowledged their possibility to support Search monetization in the long run. He also highlighted that AI is already positively impacting Google Cloud, with expectations of a 27% increase in Cloud revenue compared to last year.
Doug Anmuth from J.P. Morgan shared an upbeat perspective on Google, naming it one of their top tech stock picks, along with Uber and Amazon, and expressing optimism about the company’s progress in generative AI ahead of the earnings announcement.
However, Josh Beck from Raymond James cautioned that while the current outlook for Google’s AI initiatives appears favorable, the long-term effects on sales are still uncertain.