Analysts from Wedbush, J.P. Morgan, and Bank of America believe that Google’s advancements in artificial intelligence will enhance the company’s revenue in the upcoming second-quarter earnings report. Google’s parent company, Alphabet, is expected to announce its earnings later this week.
Bank of America analysts Justin Post and Nitin Bansal noted that the integration of Gemini into Google Cloud and AI Overviews in Google Search is expected to significantly boost sales. They remain optimistic about the growing AI features within Google’s ecosystem and expressed that the expected broader rollout of AI Overviews will likely increase user engagement in the core Search business. Despite some initial glitches in the rollout, which drew humor and criticism online, they have revised their price target for Google’s stock from $200 to $206.
In its first-quarter report in April, Google experienced a remarkable 60% profit increase, partly attributed to its AI initiatives, which also helped elevate the company’s market capitalization above $2 trillion, ranking alongside Apple, Microsoft, and Nvidia.
The positive momentum from the first quarter was driven by the introduction of new AI products under the Gemini brand, including plans for an advanced universal AI assistant to operate with smart glasses, which Google claims is 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed some caution regarding AI Overviews, he acknowledged their potential to positively impact Search monetization in the long run. He also noted that AI is already benefiting Google Cloud, forecasting a 27% revenue increase in this sector compared to the previous year.
J.P. Morgan analyst Doug Anmuth shared this optimistic outlook, designating Google as one of his firm’s top technology investments, alongside Uber and Amazon, as the company prepares for its second-quarter earnings report.
On the other hand, Raymond James analyst Josh Beck cautioned that although the current narrative around AI in relation to Google is encouraging, the long-term impact of AI on the company’s sales remains uncertain.