Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will contribute positively to its second-quarter earnings, which the company will announce after the market closes on Tuesday.
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Bank of America’s Justin Post and Nitin Bansal have updated their revenue forecasts for Google, attributing their optimism to the integration of Gemini into Google Cloud and AI Overviews in Google Search, which they believe will enhance sales. They stated in a recent research note that they remain optimistic about the expanding presence of AI within Google’s ecosystem. They anticipate that a more widespread implementation of AI Overviews will drive increased engagement in Google’s core Search services, despite earlier challenges with the feature’s launch that led to some humorous criticisms online. As a result, they have raised their price target for Google’s stock from $200 to $206.
Earlier this year, Google reported a notable 60% profit increase in the first quarter, significantly bolstered by its AI initiatives. This success caused its stock to rise, boosting its market capitalization beyond $2 trillion, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
Following months of unveiling new AI products as part of its Gemini AI initiative, Google showcased several innovations during its recent developer conference, Google I/O. Among these was a futuristic universal AI assistant capable of interpreting and communicating through a user’s smart glasses. Google claims that its latest Gemini AI operates 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious outlook on the AI Overviews compared to his colleagues, he still noted in a Monday research note that it could serve as a long-term positive influence on Search monetization. Ives also highlighted that AI is already positively impacting Google Cloud, predicting a 27% rise in Cloud revenue year-over-year, which aligns with the general optimism shared by other Wall Street analysts.
J.P. Morgan’s Doug Anmuth echoed this positive sentiment, naming Google among its top tech stock picks alongside Uber and Amazon. He expressed encouragement regarding the progress in Generative AI in anticipation of Alphabet’s second-quarter earnings report. However, Raymond James analyst Josh Beck cautioned that while the current AI developments for Google appear promising, the long-term impact on the company’s sales remains uncertain.