Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will enhance the company’s earnings for the second quarter. Alphabet, Google’s parent company, is expected to announce its earnings on Tuesday after the market closes.
Analysts Justin Post and Nitin Bansal from Bank of America have upgraded their revenue forecasts for Google, citing the integration of its Gemini AI into Google Cloud and AI features in Google Search as key factors that will boost sales. They expressed optimism about the growing AI capabilities throughout Google’s ecosystem, noting that the expanded use of AI in search could increase user engagement, despite initial challenges and mixed reactions during the rollout of AI features.
In April, Google reported a remarkable 60% rise in profits for the first quarter, largely attributed to AI developments. As a result, the company’s stock price surged, elevating its market capitalization to over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s strong first-quarter results followed a series of new AI product launches within its Gemini offerings. Highlights from the Google I/O developer conference included the introduction of a universal AI assistant designed to interact through smart glasses. The latest updates to Gemini AI reportedly deliver performance 20% faster than the latest version of ChatGPT.
While Dan Ives of Wedbush raised some caution regarding the long-term impact of AI overviews, he acknowledged that it could positively contribute to search monetization in the future. He also noted that AI is already benefiting Google Cloud, predicting a 27% rise in Cloud revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth shared similar optimistic views, labeling Google alongside Uber and Amazon among its top tech stocks and expressing enthusiasm regarding the progress of generative AI ahead of Alphabet’s second-quarter earnings report. However, analyst Josh Beck from Raymond James cautioned that, despite the current positive sentiment surrounding AI, its long-term impact on Google’s sales remains uncertain.