Analysts from Wedbush, J.P. Morgan, and Bank of America believe that Google’s advancements in artificial intelligence will enhance its earnings for the second quarter. Alphabet, Google’s parent company, is scheduled to announce its earnings results on Tuesday.
Both Bank of America and Wedbush have updated their revenue forecasts for Google, citing the integration of the Gemini AI tool into Google Cloud and AI Overviews into Google Search as key factors for increased sales. They expressed optimism about the potential of AI to stimulate activity in the core Search business, despite initial setbacks during the AI Overviews launch, which faced criticism for errors. Consequently, they raised their price target for Google shares from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, attributing a portion of this success to AI innovations. This growth propelled its stock price and lifted the company’s market value beyond $2 trillion, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s robust performance was attributed to a series of AI product launches, particularly its Gemini AI offerings. Features unveiled at the recent Google I/O conference include a futuristic universal AI assistant designed to interact through users’ smart glasses. Google has claimed that its latest Gemini AI is 20% faster than ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious view on the immediate impact of AI Overviews, he noted that it could become beneficial for Search monetization in the long run. He stated that AI is already positively influencing Google Cloud, predicting a 27% revenue growth compared to last year.
J.P. Morgan’s Doug Anmuth expressed confidence in Google, ranking it among his firm’s top tech stock picks, alongside Uber and Amazon, citing encouragement from the ongoing developments in generative AI as they await Alphabet’s second-quarter earnings report.
However, Raymond James analyst Josh Beck cautioned that ongoing AI success for Google does not guarantee sustained sales growth in the future.