Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will contribute positively to its second-quarter earnings. Alphabet, Google’s parent company, is scheduled to release its earnings report after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, anticipating that the integration of the Gemini AI into Google Cloud and AI Overviews in Google Search will enhance sales performance. They expressed confidence in the growing presence of AI across Google’s platforms, suggesting that a more extensive introduction of AI Overviews could lead to increased user engagement in the core Search business. Despite some initial challenges during the rollout of AI Overviews that led to errors and online mockery, they raised their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, much of which was attributed to its AI initiatives. This strong performance boosted the company’s stock price and elevated its market capitalization above $2 trillion, ranking it alongside industry giants like Apple, Microsoft, and Nvidia.
Following months of unveiling new AI products under its Gemini brand, Google’s first-quarter results were bolstered by its recent announcements at the Google I/O developer conference, which introduced an advanced universal AI assistant capable of interacting through users’ smart glasses. Google claims that its latest Gemini AI is 20% faster than the most recent version of ChatGPT.
While Wedbush analyst Dan Ives was more cautious about the long-term impact of AI Overviews, he noted that they may contribute positively to Search monetization over time. Ives also highlighted that AI is already enhancing Google Cloud’s performance, projecting a 27% increase in Cloud revenue compared to the previous year.
J.P. Morgan analyst Doug Anmuth shared an optimistic outlook, listing Google as one of the top tech stocks, alongside Uber and Amazon. He expressed enthusiasm regarding the progress of generative AI as Alphabet prepares for its upcoming earnings announcement.
Conversely, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding AI is favorable, it remains uncertain whether this technology will generate sustainable sales growth for Google in the long term.