Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic 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 release its earnings after the market closes on Tuesday.
Both Bank of America and Wedbush have updated their revenue projections for Google. Analysts Justin Post and Nitin Bansal from Bank of America anticipate that the incorporation of the Gemini AI platform into Google Cloud and the new AI Overviews in search results will lead to increased sales. They expressed optimism in a recent report, highlighting the potential for broader AI integrations to stimulate user engagement in Google’s core Search business, despite early challenges that drew criticism for inaccuracies in the AI Overviews. They have adjusted their price target for Google’s stock from $200 to $206.
In April, Google reported a staggering 60% rise in profits for the first quarter, significantly aided by its AI initiatives, resulting in a surge in stock prices and pushing its market valuation past the $2 trillion mark, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s robust first-quarter results stemmed from an array of new AI products launched under its Gemini AI series. Among the announcements made during the Google I/O developer conference was a futuristic universal AI assistant designed to interact through smart glasses. The company asserts that its latest Gemini AI operates 20% faster than the most recent version of ChatGPT.
Dan Ives from Wedbush expressed a more cautious outlook on AI Overviews compared to Post and Bansal, stating it could eventually benefit Search monetization. However, he emphasized that AI is already contributing positively to Google Cloud, projecting a 27% increase in Cloud revenue year-over-year.
Doug Anmuth from J.P. Morgan echoed the positive sentiment surrounding Google, naming it among the firm’s top tech stock picks, alongside Uber and Amazon. He noted his team’s enthusiasm over Google’s advancements in generative AI as the company approaches its second-quarter earnings announcement.
Raymond James analyst Josh Beck cautioned that while the current narrative regarding AI at Google is favorable, the long-term impact on sales driven by AI remains to be seen.