According to analysts from Wedbush, J.P. Morgan, and Bank of America, Google’s advancements in artificial intelligence are expected to enhance its earnings in the second quarter. The parent company Alphabet will release its earnings report following the market close on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have updated their revenue forecasts for Google. They believe that the integration of Google’s Gemini AI into Google Cloud and the AI Overviews in Google Search will significantly boost sales. They expressed optimism about the growing incorporation of AI across Google’s services, suggesting that a broader implementation of AI Overviews would lead to increased activity within the core Search business, despite some initial challenges during the rollout. They also raised their stock price target for Google from $200 to $206.
In its first quarter, Google announced a remarkable 60% rise in profits, largely attributed to its AI developments, which contributed to a surge in its stock price and increased its market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Following months of new AI product launches as part of its Gemini offerings, Google showcased an ambitious AI assistant project at the recent Google I/O developer conference. This assistant aims to engage with users through smart glasses and is claimed to be 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives showed some caution regarding AI Overviews, he noted it could eventually provide a boost to Search monetization. He also indicated that AI is positively impacting Google Cloud, forecasting a 27% growth in Cloud revenue compared to the previous year.
J.P. Morgan analyst Doug Anmuth highlighted Google’s position as one of the top tech stock picks, along with Uber and Amazon, expressing optimism about the company’s generative AI advancements ahead of the earnings announcement.
Raymond James analyst Josh Beck cautioned that while the current AI developments at Google appear favorable, the long-term impact on sales remains uncertain.