Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its earnings for the second quarter. Google’s parent company, Alphabet, is scheduled to release its earnings report after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have revised their revenue forecasts for the tech giant, highlighting the positive impact of integrating the Gemini AI into Google Cloud and AI Overviews in Google Search on sales growth. In a recent research note, they expressed optimism about the ongoing integration of AI throughout Google’s ecosystem. They believe that a wider implementation of AI overviews will increase user engagement in the core Search business, even after the initial launch faced some criticism for inaccuracies. As a result, they raised their target price for Google’s stock from $200 to $206.
Earlier in April, Google reported a significant profit increase of 60% for the first quarter, partially attributed to the success of its AI initiatives. This strong performance led to a surge in its stock price, elevating the company’s market capitalization to over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Following months of new AI product launches as part of its Gemini offerings, Google showcased an advanced universal AI assistant at its Google I/O developer conference. This assistant features capabilities to interact visually and verbally through smart glasses. Google claims its updated Gemini AI is 20% faster than the latest version of ChatGPT.
Though Wedbush’s Dan Ives expressed a more cautious outlook on AI Overviews, he suggested they could become beneficial for Search monetization in the long run. He also noted that AI is already positively influencing Google Cloud’s performance and expects a 27% increase in Cloud revenue year-over-year.
J.P. Morgan’s Doug Anmuth shared the optimistic outlook, ranking Google among the firm’s top tech stock picks alongside Uber and Amazon, highlighting confidence in the progress of generative AI ahead of Alphabet’s earnings report. However, analyst Josh Beck from Raymond James cautioned that while Google’s current narrative surrounding AI appears positive, its long-term effects on sales remain uncertain.