Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s upcoming second-quarter earnings, predicting a positive impact from the company’s artificial intelligence advancements. Alphabet, Google’s parent company, is scheduled to announce its earnings after market close on Tuesday.
Both Bank of America and Wedbush have adjusted their revenue forecasts for Google, citing the integration of the Gemini AI into Google Cloud and enhanced AI features in Google Search as key drivers for increased sales. Analysts Justin Post and Nitin Bansal from Bank of America expressed confidence in the company’s AI capabilities, suggesting that a wider implementation of AI features will likely boost activity in its core Search business, despite initial challenges in the AI rollout that led to some humorous online reactions. They have raised their price target for Google stock from $200 to $206.
In April, Google announced a remarkable 60% increase in profits for the first quarter, significantly attributed to its AI technologies, which propelled its stock price and market valuation beyond $2 trillion, placing it among tech giants like Apple, Microsoft, and Nvidia.
The company’s strong first-quarter results followed a series of recent AI product launches, which were part of their Gemini AI initiative. At the recent Google I/O developer conference, Google unveiled innovative products including a universal AI assistant designed to interact through smart glasses. The company claims its Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives is cautious about the immediate impact of AI overviews, he acknowledged that it could contribute positively to Search monetization over time. He also noted that AI developments are already enhancing Google Cloud’s performance, predicting a 27% rise in Cloud revenue year-over-year.
Doug Anmuth from J.P. Morgan shared a similar positive outlook, listing Google as one of the firm’s preferred tech stocks alongside Uber and Amazon, and expressing excitement about their progress in generative AI ahead of the earnings report.
However, Raymond James analyst Josh Beck cautioned that, despite the current positive narrative surrounding AI, it remains uncertain whether these advancements will yield sustainable sales growth for Google in the long run.