Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its performance in the upcoming second-quarter earnings report. Alphabet, Google’s parent company, is scheduled to announce its earnings after the market closes on Tuesday.
Both Bank of America and Wedbush have adjusted their revenue forecasts upward for Google. Analysts Justin Post and Nitin Bansal from Bank of America believe the integration of the Gemini AI platform within Google Cloud and the AI Overviews feature in Google Search will elevate sales. They remain optimistic about the growing presence of AI across Google’s services, asserting that the broader implementation of AI overviews will increase user engagement in the Search sector, despite early challenges that led to humorous critiques over the tool’s inaccuracies. They raised their stock price target for Google from $200 to $206.
In April, Google reported a remarkable 60% increase in its first-quarter profits, significantly driven by its AI initiatives, which helped lift its stock and push its market capitalization beyond the $2 trillion threshold, joining tech giants Apple, Microsoft, and Nvidia.
The impressive performance in the first quarter followed a series of new AI product launches under the Gemini brand. At the recent Google I/O developer conference, Google unveiled a futuristic universal AI assistant capable of interacting through smart glasses, claiming that its latest Gemini AI is 20% faster than the most recent version of ChatGPT.
While Wedbush analyst Dan Ives has a more cautious view on the impact of AI Overviews, stating that they may provide support for Search monetization over time, he noted that AI is already driving growth in Google Cloud services. Like other analysts, Ives anticipates a 27% rise in Cloud revenue compared to last year.
Echoing the optimism, J.P. Morgan’s Doug Anmuth named Google as one of the firm’s top technology stock picks, alongside Uber and Amazon, and expressed encouragement regarding progress in Generative AI ahead of Alphabet’s second-quarter earnings announcement. However, Raymond James analyst Josh Beck cautioned that while the current narrative around AI and Google is optimistic, it remains uncertain whether AI will result in sustained sales growth for the company in the long run.