Analysts from Wedbush, J.P. Morgan, and Bank of America predict a positive impact on Google’s second-quarter earnings due to its advancements in artificial intelligence. The parent company Alphabet is scheduled to release its earnings report following the market close on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have raised their revenue projections for Google, citing the integration of its Gemini AI technology into Google Cloud and the introduction of AI Overviews in Google Search as significant drivers for sales. They expressed optimism about the potential of these AI integrations to enhance user engagement in Google’s core search services, even after the initial rollout of AI Overviews faced some criticism online for inaccuracies. As a result, they adjusted their stock price target for Google upward from $200 to $206.
In April, Google announced a remarkable 60% profit increase in the first quarter, aided by its AI initiatives, which led to a surge in its stock value and elevated its market capitalization above $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Following several months of AI product launches, including its latest developments showcased at the Google I/O developer conference, Google introduced an advanced universal AI assistant capable of interacting through smart glasses. The company claims its latest Gemini AI operates 20% faster than the newest version of ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious outlook on the impact of AI Overviews compared to his colleagues, he noted that it could still enhance search monetization in the long run. He also indicated that AI advancements are already contributing positively to Google Cloud, forecasting a 27% year-on-year revenue increase.
J.P. Morgan analyst Doug Anmuth reaffirmed a favorable view of Google, listing it among the firm’s top tech stock picks alongside Uber and Amazon, and noted excitement around the progress of Generative AI before the upcoming earnings announcement.
However, Raymond James analyst Josh Beck cautioned that despite the current optimistic narrative around Google’s AI, the long-term effects on Google’s sales remain uncertain.