According to analysts from Wedbush, J.P. Morgan, and Bank of America, Google’s advancements in artificial intelligence are expected to enhance its second-quarter earnings. Google’s parent company, Alphabet, is scheduled to announce its earnings on Tuesday.
Nvidia’s stock has been experiencing one of its most challenging weeks recently. Analysts from Bank of America and Wedbush have increased their revenue forecasts for Google, with Bank of America’s Justin Post and Nitin Bansal highlighting the positive impact of integrating Gemini into Google Cloud and AI Overviews in Google Search on sales.
They noted in a research report that they remain optimistic about the growing integration of AI across Google’s services, believing that a broader deployment of AI overviews will encourage more activity in its core Search business. This optimism comes despite some initial challenges with the rollout of AI overviews, which faced criticism for inaccuracies. They adjusted their price target for Google’s shares from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, attributable in part to its AI developments. This surge in earnings resulted in a significant rise in its stock price, elevating the company’s market capitalization beyond the $2 trillion mark, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s impressive first-quarter results followed a series of new AI product launches as part of its Gemini AI initiative. At its recent developer conference, Google I/O, the company introduced a next-generation AI assistant capable of interacting through smart glasses, claiming that its latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives was less optimistic about AI Overviews compared to Post and Bansal, he acknowledged that these features could support Search monetization in the long run. He emphasized that AI is already benefiting Google Cloud, with expectations from Wall Street analysts of a 27% rise in Cloud revenue compared to last year.
J.P. Morgan’s Doug Anmuth also shared a positive outlook, naming Google as one of the firm’s top technology stocks alongside Uber and Amazon, and expressed enthusiasm about the progress in generative AI ahead of Alphabet’s second-quarter earnings report. Raymond James analyst Josh Beck cautioned, however, that while the current narrative surrounding AI is favorable, the long-term impact on Google’s sales remains uncertain.