Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings. Alphabet, Google’s parent company, is scheduled to release its earnings report after the market closes on Tuesday.
Bank of America analysts, Justin Post and Nitin Bansal, increased their revenue forecasts for Google, attributing the expected boost to the company’s integration of Gemini within Google Cloud and the implementation of AI Overviews in Google Search. They expressed optimism in a recent research note, highlighting that expanded AI features across Google’s ecosystem should enhance activity in the core Search business, despite initial challenges encountered during the rollout of AI Overviews.
In April, Google experienced a remarkable 60% profit surge in the first quarter, with AI contributing significantly to this growth. This strong performance led to a significant increase in the company’s stock price, elevating its market capitalization to over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google has consistently introduced new AI products as part of its Gemini offerings, showcasing a universal AI assistant capable of interacting through smart glasses at its recent Google I/O developer conference. The company claims that its latest Gemini AI is 20% quicker than the newest version of ChatGPT.
While Wedbush’s Dan Ives expressed cautious optimism regarding AI Overviews, stating they could eventually benefit Search monetization, he also noted that AI has already positively impacted Google Cloud revenues. Analysts anticipate a 27% increase in Cloud revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth shared this optimistic outlook, naming Google among its favored tech stocks, alongside Uber and Amazon, and noted that he is “encouraged by GenAI progress” in anticipation of Alphabet’s upcoming earnings report. However, Raymond James analyst Josh Beck cautioned that while the current AI landscape appears beneficial for Google, the long-term impact on sales remains uncertain.