Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its second-quarter earnings. Alphabet, the parent company of Google, is scheduled to announce its earnings following market close on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue projections for Google, highlighting the expected sales boost from the integration of Gemini AI into Google Cloud and the introduction of AI Overviews in Google Search. In a recent research note, they expressed optimism about the positive impact of AI on Google’s overall ecosystem, despite some initial challenges experienced during the rollout of AI Overviews when the tool faced criticism for errors. They increased their target price for Google’s stock from $200 to $206.
In its first-quarter report in April, Google experienced a remarkable 60% rise in profits, largely attributed to AI, which propelled its stock price and pushed its market capitalization beyond $2 trillion, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s impressive early performance followed several new AI product launches as part of its Gemini AI initiative. Noteworthy showcases at the Google I/O developer conference featured visions of a universal AI assistant capable of interacting through smart glasses. Google claims its latest version of Gemini AI is 20% faster than the recent iteration of ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious outlook on the potential of AI Overviews compared to Post and Bansal, he still indicated that it might contribute positively to Search monetization over time. Ives noted that AI is already having a positive impact on Google Cloud, anticipating a 27% increase in Cloud revenue from the previous year.
J.P. Morgan analyst Doug Anmuth shared a positive perspective on Google, identifying it as one of the firm’s top technology stock picks, along with Uber and Amazon, and expressing optimism regarding the company’s progress in Generative AI ahead of the upcoming earnings report.
Despite the favorable current narrative surrounding AI at Google, analyst Josh Beck from Raymond James cautioned that it remains uncertain whether AI will sustain long-term sales growth for the company.