Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s AI advancements will positively impact its earnings for the second quarter. Alphabet, Google’s parent company, is expected to announce its earnings after the market closes on Tuesday.
According to a recent study, the pill version of Novo Nordisk’s Ozempic may reduce the risk of heart attacks and strokes. Bank of America analysts Justin Post and Nitin Bansal have increased their revenue projections for Google, crediting the integration of Gemini into Google Cloud and AI Overviews in Google Search for driving sales.
They expressed optimism about the growing role of AI within Google’s operations, suggesting that the broader deployment of AI overviews could enhance engagement in the core Search business, despite earlier issues that led to online criticism of the tool for producing errors. Consequently, they raised their stock price forecast for Google from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, partly attributed to its AI efforts, leading to a surge in its stock price and pushing its market capitalization above $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The impressive first-quarter results followed months of launching new AI products under the Gemini AI brand. Notably, at Google’s developer conference, Google I/O, the company introduced an advanced AI assistant designed to interact through a user’s smart glasses. Google claims its latest Gemini AI is 20% quicker than the newest version of ChatGPT.
Dan Ives from Wedbush expressed a more cautious view on AI Overviews compared to Post and Bansal, but indicated it could eventually favor Search monetization. He noted that AI is already benefiting Google Cloud, predicting a 27% increase in Cloud revenue year-over-year, a sentiment shared among other analysts.
J.P. Morgan’s Doug Anmuth also joined the positive outlook, labeling Google as one of the top tech stocks to watch, alongside Uber and Amazon. He mentioned being encouraged by Google’s progress in generative AI ahead of the company’s earnings report for the second quarter.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding Google’s AI is optimistic, it remains to be seen whether AI will lead to long-term sales growth for the company.