Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in AI will enhance its second-quarter earnings. Alphabet, Google’s parent company, is expected to release its earnings report after the market closes on Tuesday.
Nvidia has faced one of its most challenging weeks recently. Bank of America and Wedbush have adjusted their revenue forecasts for Google upwards. According to analysts Justin Post and Nitin Bansal from Bank of America, the integration of Gemini into Google Cloud and the addition of AI Overviews in Google Search are likely to boost sales.
In a recent research note, they expressed optimism about the growing presence of AI throughout Google’s platforms, suggesting that a broader deployment of AI overviews could increase engagement in the core Search business. This comes despite initial issues reported during the rollout of AI overviews, which drew mockery online for generating errors. Their price target for Google’s stock has been increased from $200 to $206.
Earlier this year, Google reported a remarkable 60% increase in profits for the first quarter, aided in part by AI, which led to a significant rise in its stock price and pushed its market capitalization to over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The company’s impressive performance in the first quarter followed several new AI product launches, particularly under its Gemini AI umbrella. Notable announcements at the Google I/O developer conference included an advanced universal AI assistant designed to interact through user smart glasses. Google claims its new Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives held a more cautious view on AI Overviews compared to his peers, he noted that it could eventually support Search monetization. He also pointed out that AI has already begun to positively impact Google Cloud, forecasting a 27% increase in Cloud revenue year-over-year.
J.P. Morgan’s Doug Anmuth shared a similarly upbeat outlook, categorizing Google as one of the firm’s top tech stocks alongside Uber and Amazon last week and expressing encouragement about the progress of Generative AI ahead of Alphabet’s upcoming earnings report.
Conversely, Raymond James analyst Josh Beck cautioned that while the current outlook on AI for Google appears positive, its potential to drive long-term sales growth remains uncertain.