Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s upcoming second-quarter earnings will reflect positively due to its advancements in AI technology. Alphabet, Google’s parent company, is scheduled to announce its earnings on Tuesday after market hours.
Following a review, both Bank of America and Wedbush raised their revenue forecasts for Google. Justin Post and Nitin Bansal from Bank of America noted that the integration of the Gemini AI system into Google Cloud and AI Overviews in Google Search is expected to enhance sales.
In their research note, they expressed optimism about Google’s AI developments, emphasizing that a more extensive implementation of AI Overviews could lead to increased engagement in the core Search business, even though initial challenges with the AI tool sparked internet humor due to its inaccuracies. As a result, they adjusted 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, largely attributed to its AI efforts, which propelled its stock price and elevated its market capitalization above $2 trillion, alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s strong performance in the first quarter closely followed the launch of several new AI products related to its Gemini AI suite. Notably, at its Google I/O developer conference, the company introduced a futuristic universal AI assistant capable of interacting through smart glasses. Google asserts that its latest Gemini AI is 20% faster than the current version of ChatGPT.
Dan Ives from Wedbush offered a more cautious outlook on AI Overviews compared to Post and Bansal. However, he indicated that such tools could eventually contribute positively to Search monetization. Ives also noted that AI is already having a beneficial effect on Google Cloud, projecting a 27% increase in Cloud revenue compared to the previous year.
Doug Anmuth from J.P. Morgan shared the optimistic view, listing Google among its top tech stock recommendations, along with Uber and Amazon, highlighting the positive advancements in generative AI ahead of Alphabet’s upcoming earnings report.
Meanwhile, analyst Josh Beck from Raymond James cautioned that while the current AI narrative surrounding Google is favorable, it remains uncertain whether it will result in sustained long-term sales growth.