Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s upcoming second-quarter earnings, attributing expected growth to the company’s advancements in artificial intelligence. Alphabet, Google’s parent company, is set to report its earnings on Tuesday afternoon.
Bank of America analysts Justin Post and Nitin Bansal have adjusted their revenue forecasts for Google upwards, highlighting the benefits of integrating the Gemini AI into Google Cloud and AI Overviews in the Google Search platform. They believe these innovations will enhance sales, stating, “We remain positive on growing AI integrations across Google’s ecosystem and think a broader rollout of AI overviews will help drive higher activity in the core Search business.” Despite initial challenges with AI Overviews that garnered some online ridicule for errors, they have increased their stock price outlook for Google from $200 to $206.
In April, Google experienced a remarkable 60% profit surge for the first quarter, largely attributed to AI developments, which drove the stock price up and helped the company’s market cap exceed $2 trillion, placing it among the ranks of Apple, Microsoft, and Nvidia.
This impressive performance followed a series of AI product launches under its Gemini offerings, including a groundbreaking universal AI assistant demonstrated at the Google I/O developer conference, capable of interacting through smart glasses. Google asserts that its latest Gemini AI boasts a speed advantage of 20% over the latest version of ChatGPT.
Dan Ives from Wedbush held a more cautious view on AI Overviews but acknowledged its potential as a future asset for Search monetization. He also noted that AI has already positively influenced Google Cloud, projecting a 27% revenue increase from the previous year.
J.P. Morgan’s Doug Anmuth echoed the optimism and identified Google among its top technology stock picks, alongside Uber and Amazon, citing excitement over advancements in Generative AI ahead of Alphabet’s earnings announcement.
However, analyst Josh Beck from Raymond James cautioned that while the current AI-driven narrative for Google appears favorable, the long-term impact of AI on the company’s sales remains uncertain.