Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will enhance its earnings for the second quarter. The parent company of Google, Alphabet, is scheduled to announce its earnings following the market close on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, citing the impact of integrating the Gemini AI features into Google Cloud and enhancements in AI functionalities in Google Search as key drivers for sales growth. They expressed optimism about the expanding role of AI across Google’s platforms and believe that a wider implementation of AI features will encourage higher user engagement in its core search business. Even amid early challenges—where AI Overviews encountered issues that led to online mockery—the analysts raised their price target on Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase for the first quarter, largely attributed to its AI initiatives, which propelled its stock price and raised its market capitalization beyond $2 trillion, placing it alongside Apple, Microsoft, and Nvidia.
This strong performance followed several months of rolling out new AI tools as part of the Gemini initiative. One of the standout announcements from the Google I/O developer conference was an advanced AI assistant capable of interacting via smart glasses. Google also claims that its latest version of Gemini AI outperforms the newest ChatGPT model by 20% in speed.
While Dan Ives of Wedbush is slightly less optimistic about AI Overviews’ immediate impact, he believes it could eventually benefit search revenue. He noted that AI has already shown positive effects on Google Cloud, with expectations for a 27% revenue increase from last year.
J.P. Morgan’s Doug Anmuth shared a similarly positive outlook, designating Google as one of the firm’s leading technology stock picks—along with Uber and Amazon—expressing confidence in the advancements in generative AI ahead of Alphabet’s earnings release.
However, Raymond James analyst Josh Beck cautioned that the current positive sentiment surrounding Google’s AI offerings does not guarantee sustained sales growth in the long run.