Analysts from Wedbush, J.P. Morgan, and Bank of America believe that Google’s advancements in artificial intelligence will positively influence the company’s second-quarter earnings, set to be announced on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, highlighting the potential impact of integrating the AI tool Gemini into Google Cloud and the AI Overviews feature in Google Search. They expressed optimism in a recent report, noting that a wider implementation of AI overviews could elevate activity in the core Search business, despite some initial challenges during the rollout. As a result, they adjusted their price target for Google’s stock from $200 to $206.
In April, Google experienced a remarkable 60% profit increase in the first quarter, largely attributed to its AI developments, which boosted the company’s stock and pushed its market cap beyond $2 trillion, joining tech giants like Apple, Microsoft, and Nvidia.
The company has been actively launching new AI products as part of its Gemini offerings, including a next-generation universal AI assistant showcased at Google I/O that is said to outpace the latest ChatGPT by 20%.
While Wedbush’s Dan Ives expressed some reservations regarding the immediate impact of AI Overviews, he noted that it could enhance Search monetization over time, and acknowledged that AI is already providing a boost to Google Cloud, with expectations of a 27% revenue increase in that sector from the previous year.
J.P. Morgan’s Doug Anmuth affirmed positive sentiments towards Google, identifying it as one of their top tech picks, alongside Uber and Amazon, and expressed optimism about the progress in generative AI ahead of the earnings report. However, Josh Beck of Raymond James cautioned that the long-term effects of AI on Google’s sales are yet to be seen, despite the current favorable narrative.