Analysts from Wedbush, J.P. Morgan, and Bank of America predict a favorable second-quarter earnings report for Google, driven by advancements in its AI technology. Google’s parent company, Alphabet, is scheduled to announce its earnings after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, attributing this optimism to the integration of the Gemini AI technology into Google Cloud and enhancements to AI Overviews in Google Search. They expressed confidence that the expanded use of AI tools will lead to increased activity in Google’s core Search business, despite initial challenges faced during the rollout of AI Overviews, which drew some online criticism. Post and Bansal raised their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% rise in profits for the first quarter of the year, largely thanks to AI developments, which also propelled its stock price and helped the company achieve a market capitalization exceeding $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The company’s impressive performance came after extensive AI product launches, particularly during its developer conference, Google I/O. Notably, Google unveiled a cutting-edge AI assistant capable of interaction through smart glasses and claimed its latest Gemini AI version is 20% faster than the latest ChatGPT.
While Wedbush’s Dan Ives has a more cautious outlook regarding the AI Overviews compared to his peers, he believes it could potentially enhance Search monetization over time. Additionally, he highlights that AI is already positively impacting Google Cloud, forecasting a 27% growth in Cloud revenue compared to the previous year.
Echoing this optimistic outlook, J.P. Morgan’s Doug Anmuth identified Google as one of the firm’s top tech stocks, alongside Uber and Amazon, and noted enthusiasm for the progress made with GenAI before Alphabet’s upcoming earnings report. However, Raymond James analyst Josh Beck cautioned that while the current AI landscape appears beneficial for Google, the long-term impact on sales remains uncertain.