Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively impact its earnings for the second quarter. The parent company, Alphabet, is scheduled to release its earnings report on Tuesday.
Both Bank of America and Wedbush have increased their revenue forecasts for Google. Analysts Justin Post and Nitin Bansal from Bank of America believe that the integration of the Gemini AI into Google Cloud and the introduction of AI Overviews in Google Search will enhance sales. They expressed optimism about the growing AI features within Google’s ecosystem, suggesting that a wider launch of AI Overviews could boost user engagement in the core Search business. Despite some early criticism of AI Overviews for producing inaccuracies, they raised their price target for Google stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase for the first quarter, fueled in part by AI. This success led to a jump in its stock price, propelling the company’s market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
This positive financial performance followed months of new artificial intelligence product launches tied to the Gemini AI platform. At the Google I/O developer conference, Google unveiled a next-generation AI assistant that can interact through smart glasses. The company has claimed that its latest Gemini AI is 20% faster than ChatGPT.
While Wedbush analyst Dan Ives expressed cautious optimism about AI Overviews, suggesting they could benefit Search monetization over time, he noted that AI is already having a positive effect on Google Cloud. Like many of his peers, he anticipates a 27% increase in Cloud revenue compared to the previous year.
Doug Anmuth from J.P. Morgan shared a similar positive perspective, naming Google among its top tech stocks, alongside Uber and Amazon, and highlighted “encouragement” from the company’s advancements in Generative AI in anticipation of Alphabet’s earnings report.
However, Raymond James analyst Josh Beck cautioned that although the current AI outlook for Google is optimistic, the long-term impact on Google’s sales remains uncertain.