Analysts from Wedbush, J.P. Morgan, and Bank of America believe that Google’s advancements in artificial intelligence will enhance its earnings in the upcoming second quarter. Alphabet, Google’s parent company, is scheduled to release its earnings report on Tuesday after the market closes.
Bank of America analysts Justin Post and Nitin Bansal have raised their revenue projections for Google, attributing this optimism to the integration of the Gemini AI into Google Cloud and the AI Overviews feature in Google Search. They expressed confidence that these developments would lead to increased sales, stating, “We remain positive on growing AI integrations across Google’s ecosystem,” and anticipate that a wider rollout of AI overviews will generate more activity in Google’s core Search business. Their price target for Google’s stock has been increased from $200 to $206.
In April, Google announced a remarkable 60% profit increase in the first quarter, largely driven by AI, resulting in a significant rise in its stock price and propelling its market capitalization above $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s impressive first-quarter results followed a series of new AI product launches as part of its Gemini offerings. Among them was a universal AI assistant unveiled at the Google I/O developer conference, designed to interact through a user’s smart glasses. Google claims its latest Gemini AI is 20% faster than the current version of ChatGPT.
Wedbush’s Dan Ives expressed a more cautious view on AI Overviews compared to Post and Bansal. However, he noted that it could eventually enhance Search monetization. Ives also highlighted that AI is already benefiting Google Cloud, with expectations of a 27% revenue increase compared to last year.
Similar sentiments were echoed by J.P. Morgan’s Doug Anmuth, who listed Google among the firm’s top tech stocks, alongside Uber and Amazon, and emphasized his team’s encouragement regarding advancements in generative AI ahead of Alphabet’s earnings report.
Raymond James analyst Josh Beck provided a word of caution, stating that while the current narrative surrounding AI at Google is positive, it remains uncertain whether AI will lead to sustained long-term sales growth.