Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence could significantly enhance its second-quarter earnings. Google’s parent company, Alphabet, is scheduled to announce its earnings report on Tuesday.
Nvidia, on the other hand, is experiencing a particularly volatile week in the stock market.
The analysts at Bank of America, Justin Post and Nitin Bansal, have increased their revenue forecasts for Google, attributing the potential boost to the integration of the Gemini AI into Google Cloud and AI Overviews in Google Search. They expressed optimism in a recent research note, stating that the expansion of AI features across Google’s services is likely to spur increased activity in its core Search business, despite a rocky start with the AI Overviews that faced criticism online for inaccuracies. They also raised their price target for Google’s stock from $200 to $206.
In April, Google reported a staggering 60% increase in profits for the first quarter, largely driven by AI developments. This impressive performance led to a surge in share prices, elevating the company’s market valuation beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Following a series of artificial intelligence product launches related to its Gemini AI offerings, Google showcased its latest innovations during the Google I/O developer conference, including a universal AI assistant that can interact through smart glasses. Google claims its new Gemini AI system is 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious view of the AI Overviews compared to Post and Bansal, he noted that it could gradually benefit Search monetization. Additionally, he highlighted that AI is already contributing to growth in Google Cloud, with expectations of a 27% increase in Cloud revenue compared to last year.
J.P. Morgan analyst Doug Anmuth shared the positive outlook, naming Google among the firm’s top tech stock picks alongside Uber and Amazon. He noted his team’s optimism regarding progress in generative AI in anticipation of Alphabet’s upcoming earnings report.
However, analyst Josh Beck from Raymond James cautioned that while the current narrative surrounding Google’s AI efforts is favorable, it remains uncertain whether these developments will sustainably boost sales in the long term.