Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its upcoming second-quarter earnings report. The parent company, Alphabet, is scheduled to share its earnings results on Tuesday after the market closes.
Both Bank of America and Wedbush have adjusted their revenue forecasts for Google, with analysts Justin Post and Nitin Bansal highlighting that the integration of the Gemini AI into Google Cloud and the AI Overviews in Google Search are expected to increase sales. They expressed optimism regarding the growing AI capabilities across Google’s platforms, suggesting that a wider implementation of AI overviews could lead to increased user engagement in the core Search business. Despite some initial challenges with the AI overview tool—initially ridiculed online for errors—Post and Bansal have raised their stock price target for Google from $200 to $206.
In its first quarter, Google reported a remarkable 60% increase in profits, aided by AI developments, which also contributed to a surge in its stock price, elevating the company’s market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Following a series of new AI product launches linked to its Gemini offerings, Google’s first-quarter success reflects its ongoing innovation. Notable updates presented at the Google I/O developer conference included a next-generation AI assistant capable of interacting through a user’s smart glasses, with Google claiming that its latest Gemini AI is 20% more efficient than the latest version of ChatGPT.
Although Wedbush’s Dan Ives is slightly more cautious about the impact of AI Overviews, he acknowledged in a recent research note that they could contribute positively to Search monetization over time. He also pointed out that AI is already enhancing Google Cloud’s performance, and like many Wall Street analysts, he anticipates a 27% rise in Cloud revenue compared to last year.
Doug Anmuth from J.P. Morgan reiterated the optimistic outlook, identifying Google as one of the firm’s top tech stocks, alongside Uber and Amazon. He noted that he and his team are encouraged by the progress in generative AI ahead of Alphabet’s earnings announcement.
Conversely, Raymond James analyst Josh Beck cautioned that while the current AI narrative surrounding Google looks promising, the long-term impact of AI on the company’s sales remains uncertain.