Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings. Google’s parent company, Alphabet, is expected to announce its earnings on Tuesday after market close.
Both Bank of America and Wedbush analysts have increased their revenue forecasts for Google. Justin Post and Nitin Bansal from Bank of America believe the integration of the Gemini AI into Google Cloud and the implementation of AI Overviews in Google Search will enhance sales.
They expressed optimism about the growing incorporation of AI across Google’s services, stating, “We believe a wider rollout of AI overviews will stimulate greater activity in the central Search business.” This comes despite initial issues with the AI overview tool, which faced criticism online for inaccuracies. Consequently, Post and Bansal have 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, largely attributed to AI advancements. This surge propelled its stock price, elevating the company’s market value to over $2 trillion, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
Following months of releasing various artificial intelligence products as part of its Gemini offerings, Google showcased a new universal AI assistant at its Google I/O developer conference. The company claims this latest iteration of Gemini is 20% quicker than the current version of ChatGPT.
Despite some reservations, Wedbush’s Dan Ives acknowledged that while he is not as optimistic as others regarding AI Overviews, he noted it could eventually support Search monetization. He also mentioned that AI has already contributed positively to Google Cloud’s performance, predicting a 27% increase in Cloud revenue year-over-year.
Similarly, Doug Anmuth from J.P. Morgan shared a favorable outlook, naming Google as one of its top technology stocks, citing encouraging developments in generative AI prior to Alphabet’s second-quarter earnings report.
However, analyst Josh Beck from Raymond James cautioned that although the current AI developments seem promising for Google, it remains uncertain whether AI will sustain long-term sales growth for the company.