Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its second-quarter earnings report, which is set to be released after the market closes on Tuesday.
Bank of America professionals Justin Post and Nitin Bansal have notably increased their revenue forecasts for Google, citing the integration of its new features like Gemini into Google Cloud and AI Overviews in Google Search as key drivers for sales growth. They expressed optimism in a recent research note, suggesting that the broader deployment of AI overviews could elevate activity in Google’s core Search business, despite the initial challenges faced during the rollout.
In April, Google announced a remarkable 60% profit surge for the first quarter, largely attributed to its AI developments, leading to a significant rise in its stock price and pushing its market value beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The company has been actively releasing new AI products, particularly through its Gemini AI program. At its recent Google I/O developer conference, the tech giant showcased a futuristic AI assistant capable of interacting through smart glasses, claiming that its latest Gemini model is 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed some caution regarding the immediate impact of AI Overviews, he acknowledged that it could become beneficial for Search monetization in the long run. Furthermore, he noted that AI is currently boosting Google Cloud, with expectations of a 27% revenue increase compared to last year.
J.P. Morgan analyst Doug Anmuth mirrored the positive outlook, highlighting Google as one of the firm’s top tech stock picks, alongside Uber and Amazon, and expressing enthusiasm about the progress in Generative AI as Alphabet approaches its earnings announcement.
However, Raymond James analyst Josh Beck raised concerns, noting that while the current narrative surrounding AI is favorable, the long-term impact on Google’s sales remains uncertain.