Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s recent advancements in artificial intelligence will enhance its performance in the upcoming second-quarter earnings report. Alphabet, Google’s parent company, is scheduled to disclose its earnings after market close on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have raised their revenue forecasts for Google, attributing potential sales boosts to the integration of the Gemini AI system into Google Cloud and enhancements in Google Search. They expressed optimism regarding the expanding use of AI across Google’s services, suggesting that a wider implementation of AI features could increase user engagement with the core Search business. Despite some initial setbacks during the launch of AI features, which drew criticism and humor online for inaccuracies, the analysts have increased their price target for Google stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, largely driven by its AI initiatives. This strong financial performance led to a significant rise in its stock price, resulting in a market capitalization exceeding $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The surge in performance coincided with a series of new AI product launches under the Gemini brand. During its recent developer conference, Google showcased a vision for a universal AI assistant capable of interactive communication through smart glasses. The company also highlighted that its latest Gemini AI is 20% faster than the most recent version of ChatGPT.
While Wedbush’s Dan Ives expressed cautious optimism regarding AI features in Search, suggesting they might contribute positively over time, he noted that AI has already begun enhancing Google Cloud’s offerings. Like many Wall Street analysts, he anticipates that Google will experience a 27% increase in Cloud revenue from the previous year.
J.P. Morgan analyst Doug Anmuth echoed the optimistic outlook, designating Google as one of the firm’s top tech stock picks, alongside Uber and Amazon. He expressed enthusiasm about the progress in Generative AI ahead of Alphabet’s earnings release.
On the other hand, Raymond James analyst Josh Beck cautioned that while the immediate narrative around AI for Google is favorable, it remains uncertain whether these advancements will lead to sustained long-term revenue growth.