Analysts from Wedbush, J.P. Morgan, and Bank of America suggest that Google’s advances in artificial intelligence could significantly enhance its earnings for the second quarter. Alphabet, Google’s parent company, is expected to announce its quarterly earnings on Tuesday.
Following the release of yet another quarterly loss, Trump Media’s stock dipped by 7%.
Bank of America analysts Justin Post and Nitin Bansal have raised their revenue forecasts for Google, citing the company’s integration of its Gemini AI into Google Cloud and the Introduction of AI Overviews in Google Search as key sales drivers. They expressed optimism about the potential for launching AI Overviews more broadly to increase activity in the core Search business, despite some initial missteps that led to online ridicule of the tool for producing errors. Consequently, they adjusted their price target for Google’s stock from $200 to $206.
In April, Google announced a remarkable 60% rise in profits for the first quarter, largely attributed to AI developments, which subsequently pushed its stock price higher and its market cap over $2 trillion, joining other giants like Apple, Microsoft, and Nvidia.
The strong performance in the first quarter followed several new AI product launches as part of Google’s Gemini initiative. Among the recent announcements at the Google I/O developer conference was a next-generation AI assistant capable of interacting through smart glasses, with Google asserting that the latest version of Gemini AI is 20% quicker than the latest ChatGPT.
While Wedbush’s analyst Dan Ives expressed a more cautious outlook on the AI Overviews compared to his peers, he indicated it could eventually support Search revenue growth. He also believes that AI has already started to positively impact Google Cloud, anticipating a 27% year-over-year increase in Cloud revenue.
Similarly, J.P. Morgan’s Doug Anmuth highlighted Google’s potential, ranking the company among its top tech stock picks alongside Uber and Amazon, and expressed excitement about the advancements in GenAI as the earnings report approaches.
However, Raymond James analyst Josh Beck cautioned that although the current AI-driven optimism for Google is strong, it’s unclear if this growth will be sustainable in the long run.