Analysts from Wedbush, J.P. Morgan, and Bank of America project that Google’s advancements in artificial intelligence will enhance its second-quarter earnings, with Alphabet, Google’s parent company, scheduled to release its earnings report on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue forecasts for Google, attributing potential sales boosts to the company’s integration of Gemini into Google Cloud and the AI overviews in Google Search. They expressed optimism about the expanding AI features across Google’s platforms, which they believe will increase engagement in the core Search business, despite initial challenges in the rollout where the tool faced criticism for inaccuracies. They revised their price target for Google’s stock upward from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, driven in part by AI developments, leading to a significant rise in its stock price and pushing its market capitalization above $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
This strong quarterly performance followed a series of AI product launches under the Gemini initiative. At its recent developer conference, Google unveiled a vision for a universal AI assistant capable of interacting through a user’s smart glasses, claiming that its latest Gemini AI technology is 20% faster than the newest version of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious view on AI overviews compared to his peers, he acknowledged its potential to positively influence Search monetization in the long term. He also noted that AI advancements are already benefiting Google Cloud, expecting a 27% revenue increase in the Cloud segment compared to last year.
J.P. Morgan’s Doug Anmuth also shared an optimistic outlook, naming Google among its top tech stock picks alongside Uber and Amazon, highlighting the encouraging progress in generative AI ahead of Alphabet’s earnings report. Meanwhile, Raymond James analyst Josh Beck cautioned that while the current perception of Google’s AI efforts is favorable, the long-term impact on sales remains uncertain.