Google’s advancements in artificial intelligence are anticipated to positively impact its second-quarter earnings, as indicated by analysts from Wedbush, J.P. Morgan, and Bank of America. The parent company, Alphabet, is scheduled to release its earnings report after market close on Tuesday.
Analysts at Bank of America have raised their revenue projections for Google, highlighting the potential benefits of integrating Gemini into Google Cloud and enhancing AI Overviews in Google Search. They noted that the growing incorporation of AI across Google’s ecosystem is expected to boost engagement in its core Search operations. Despite some initial challenges with the rollout of AI Overviews, which faced criticism for inaccuracies, the analysts have increased their stock price target for Google from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, largely driven by its AI initiatives. This impressive performance led to a surge in its stock price, elevating its market capitalization beyond $2 trillion, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s strong results stemmed from the launch of various AI products, particularly within its Gemini AI offerings. Notably, during the Google I/O developer conference, the company unveiled a next-generation AI assistant capable of visual interaction via smart glasses. Google asserts that its latest Gemini AI model outperforms the latest ChatGPT by being 20% faster.
While Wedbush’s Dan Ives expressed some caution regarding AI Overviews, he suggested that it could ultimately enhance Search monetization. He also noted that AI is already providing momentum for Google Cloud, forecasting a 27% increase in Cloud revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth shared a similarly optimistic outlook, naming Google one of its top technology stock picks, alongside Uber and Amazon, citing encouraging advancements in generative AI in advance of Alphabet’s second-quarter earnings announcement.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding AI is favorable for Google, its long-term impact on sales remains uncertain.