Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively influence its second-quarter earnings, with Alphabet set to announce financial results after the market closes on Tuesday.
Following the implementation of a new $20 minimum wage for fast food employees in California, a recent study indicates that job losses did not occur.
Bank of America analysts, including Justin Post and Nitin Bansal, have boosted their revenue forecasts for Google. They suggest that the integration of Gemini into Google Cloud and the introduction of AI Overviews in Google Search will enhance sales significantly. Their research note highlighted a positive outlook on AI integrations within Google’s ecosystem and emphasized that a wider adoption of AI overviews is likely to stimulate activity in the core Search division, despite initial challenges during the AI Overviews rollout that led to some internet ridicule over errors and inaccuracies. As a result, they revised their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, partly attributed to its AI advancements. This surge contributed to a substantial rise in the company’s stock price, elevating its market capitalization beyond $2 trillion, positioning it alongside major players like Apple, Microsoft, and Nvidia.
The successful first-quarter results followed a series of new AI product launches, notably during the Google I/O developer conference, where the company unveiled a futuristic universal AI assistant capable of interacting through smart glasses. Google asserts that its latest Gemini AI is 20% more efficient than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious view on the AI Overviews compared to Post and Bansal, he acknowledged that it could provide support for Search monetization in the long run. He also noted that AI has already had a positive impact on Google Cloud, predicting a 27% revenue increase in this sector compared to the previous year.
Doug Anmuth from J.P. Morgan shared similar optimistic sentiments, including Google among the firm’s top tech stock picks alongside Uber and Amazon, citing growing confidence in GenAI developments ahead of Alphabet’s upcoming earnings report. Conversely, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding Google’s AI efforts is promising, the long-term effect of AI on sales remains uncertain.