Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings. Google parent Alphabet is expected to announce its earnings on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, citing the benefits of integrating its Gemini AI into Google Cloud and AI Overviews in Google Search. They expressed optimism in a recent research note, believing that the wider deployment of AI features will enhance user engagement within the core Search business. They have adjusted their price target for Google’s stock from $200 to $206, despite some initial missteps in the rollout that drew criticism online.
In April, Google reported a remarkable 60% rise in profits during the first quarter, attributed in part to its AI initiatives, which drove its stock price up and raised its market capitalization beyond $2 trillion, alongside tech giants like Apple, Microsoft, and Nvidia.
This impressive performance followed numerous launches of new AI tools linked to its Gemini AI offerings. At its recent Google I/O developer conference, the company unveiled a futuristic universal AI assistant with capabilities for visual and verbal interaction through smart glasses. Google claims its latest AI model is 20% faster than the current version of ChatGPT.
While Wedbush’s Dan Ives is less enthusiastic about AI Overviews, he believes they may support Search monetization in the future. He pointed out that AI is already having a positive impact on Google Cloud, estimating a 27% increase in Cloud revenue year-over-year.
Similarly, J.P. Morgan’s Doug Anmuth expressed a positive outlook, ranking Google among his firm’s top tech picks, along with Uber and Amazon, due to encouraging advancements in generative AI leading up to Alphabet’s earnings report. However, Raymond James analyst Josh Beck cautioned that the long-term impact of AI on Google’s sales remains uncertain, despite the current favorable narrative.