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. The parent company, Alphabet, is scheduled to announce its earnings on Tuesday after market close.
Recent evaluations by Bank of America and Wedbush have led to improved revenue forecasts for Google. Analysts Justin Post and Nitin Bansal from Bank of America believe that the integration of Gemini AI into Google Cloud and AI Overviews in Google Search will stimulate sales growth.
In their research note, they expressed optimism about the increasing AI integrations within Google’s ecosystem, asserting that a wider rollout of AI overviews is likely to increase activity in the core Search business, despite initial mishaps that turned the tool into a subject of online humor for its mistakes. As a result, they lifted their price target for Google’s stock from $200 to $206.
Earlier this year, Google reported a remarkable 60% profit increase in the first quarter, partly attributed to its AI initiatives, which propelled its stock price and market capitalization beyond $2 trillion, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s strong first-quarter results followed a series of new AI product launches, particularly under its Gemini AI suite. At the recent Google I/O developer conference, they unveiled a futuristic AI assistant capable of interacting with users via smart glasses, boasting a speed 20% faster than the latest ChatGPT.
While Wedbush’s Dan Ives views AI Overviews with some skepticism, he acknowledged their potential to contribute positively to Search monetization as they mature. He also highlighted that AI has already proven beneficial for Google Cloud, with predictions of a 27% increase in Cloud revenue compared to last year.
J.P. Morgan analyst Doug Anmuth shared this optimistic outlook, naming Google as one of the firm’s top-tech stock picks, alongside Uber and Amazon, citing excitement around the progress of Generative AI ahead of Alphabet’s earnings report.
However, Raymond James analyst Josh Beck cautioned that, despite the current positive sentiment surrounding AI, it remains unclear whether these advancements will lead to sustained sales growth for Google in the long run.