Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advances in artificial intelligence will enhance the company’s earnings for the second quarter. Google’s parent company, Alphabet, is scheduled to release its earnings report on Tuesday.
Both Bank of America and Wedbush have adjusted their revenue forecasts for Google upward. Analysts Justin Post and Nitin Bansal from Bank of America believe that the integration of Gemini into Google Cloud and the implementation of AI Overviews in Google Search will lead to increased sales. They expressed optimism regarding the growing use of AI across Google’s services, suggesting that the expanded deployment of AI overviews could enhance activity in the core Search business. Their price target for Google’s stock has increased from $200 to $206.
In April, Google reported a remarkable 60% rise in profits for the first quarter, largely attributed to AI, resulting in a surge in stock price and elevating the company’s market capitalization over the $2 trillion mark, alongside Apple, Microsoft, and Nvidia.
The impressive performance in the first quarter followed months of new AI product launches as part of Google’s Gemini AI platform. Notable releases during the Google I/O developer conference included a futuristic universal AI assistant capable of interacting through users’ smart glasses. Google claims its latest Gemini AI operates 20% faster than the current iteration of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious outlook on AI Overviews compared to Post and Bansal, he indicated that it could provide supportive momentum for Search monetization over time. Additionally, he noted that AI is already contributing positively to Google Cloud, aligning with broader predictions from Wall Street analysts who expect a 27% increase in Cloud revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth shared the positive outlook, designating Google as one of the firm’s top tech stock picks, alongside Uber and Amazon, highlighting optimism regarding generative AI progress ahead of Alphabet’s upcoming earnings report.
However, Raymond James analyst Josh Beck cautioned that while the prevailing AI narrative for Google looks promising, it remains uncertain whether AI will yield a long-term boost to Google’s sales.