Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings, with Alphabet set to announce these earnings after the market closes on Tuesday.
Both Bank of America and Wedbush have increased their revenue projections for Google. Analysts Justin Post and Nitin Bansal from Bank of America believe that the integration of the Gemini AI into Google Cloud and AI Overviews in Google Search will significantly boost sales.
In a recent research note, they expressed optimism about the growing integration of AI throughout Google’s services, expecting that an expanded rollout of AI overviews will enhance user engagement in the core Search segment. They acknowledged earlier issues with the implementation of AI overviews, which faced mockery online for some inaccuracies, but nonetheless raised their price target for Google stock from $200 to $206.
Google experienced a remarkable 60% profit surge in the first quarter, attributed in part to AI contributions, which led to its stock price skyrocketing and its market value surpassing $2 trillion, joining the ranks of tech giants like Apple, Microsoft, and Nvidia.
This impressive performance came after a series of AI product releases under Google’s Gemini offerings. At its recent developer conference, Google I/O, the company unveiled plans for an advanced AI assistant capable of interacting through smart glasses, claiming that its latest Gemini AI is 20% quicker than the current ChatGPT model.
While Wedbush’s Dan Ives expressed some caution regarding the potential of AI Overviews, he noted that they could eventually benefit Search monetization. He also highlighted AI’s positive impact on Google Cloud, anticipating a 27% revenue increase from the previous year, aligning with the expectations of other Wall Street analysts.
Doug Anmuth of J.P. Morgan shared similar optimism, naming Google as one of the firm’s top tech stock picks alongside Uber and Amazon. He mentioned being encouraged by the advancements in generative AI as Alphabet approaches its second-quarter earnings announcement.
However, Raymond James analyst Josh Beck cautioned that, despite the current positive outlook surrounding AI at Google, the long-term impact on sales still remains uncertain.