Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will reflect positively in its second-quarter earnings report, which is set to be released on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have adjusted their revenue forecasts upward, attributing the expected boost to Google’s integration of its Gemini AI platform into Google Cloud and AI features in Google Search. They maintain a positive outlook on the expanding AI capabilities across Google’s services, anticipating that enhanced AI features will increase user engagement in Search, despite some early challenges with the AI tool, which faced criticism for errors. They 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, largely driven by its AI initiatives, which propelled its stock price and elevated the company’s market value beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Following several releases of new AI products as part of its Gemini initiative, Google showcased a futuristic AI assistant at its Google I/O conference that could interact via smart glasses. The latest version of Gemini AI is reported to be 20% faster than the latest ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious outlook on AI Overviews, he acknowledged its potential to enhance monetization in Search over time and noted positive impacts of AI on Google Cloud, anticipating a 27% increase in Cloud revenue year-over-year.
J.P. Morgan’s Doug Anmuth shared a similar optimistic perspective, identifying Google as one of their top tech stock picks alongside Uber and Amazon, and expressing encouragement over advances in generative AI before Alphabet’s upcoming earnings announcement.
However, Raymond James analyst Josh Beck cautioned that despite the favorable current AI narrative, the long-term impact of AI on Google’s sales remains to be seen.