Analysts from Wedbush, J.P. Morgan, and Bank of America project that Google’s advances in artificial intelligence are set to enhance its earnings for the second quarter, with the parent company Alphabet scheduled to release its earnings report on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, attributing the expected boost to the integration of the Gemini AI system in Google Cloud and AI Overviews within Google Search. They expressed optimism regarding the accelerated AI integration throughout Google’s services, suggesting that the wider deployment of AI Overviews could elevate engagement in the core search business. Despite some initial challenges with the AI Overviews, which attracted online ridicule for producing errors, they raised their stock price target for Google from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, thanks in part to advances in its AI technology. This strong performance resulted in a surge in stock prices, elevating the company’s market capitalization to beyond $2 trillion, joining ranks with Apple, Microsoft, and Nvidia.
The positive financial results came on the heels of a series of AI product launches tied to Google’s Gemini offerings. At the recent Google I/O developer conference, the company introduced a future AI assistant capable of visual and vocal interactions via smart glasses. Google boasts that the latest iteration of its Gemini AI operates 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives held a more cautious outlook on the potential impact of AI Overviews compared to Post and Bansal, he noted in a recent research report that it could gradually benefit search monetization. Ives also pointed out that AI is already favorably influencing Google Cloud, anticipating a 27% rise in Cloud revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth shared a favorable view of the company, ranking Google among the top tech stocks along with Uber and Amazon, citing optimism regarding its Generative AI developments ahead of Alphabet’s anticipated earnings report. Conversely, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding AI and Google is promising, the long-term impact on sales remains to be seen.