Analysts from Wedbush, J.P. Morgan, and Bank of America believe Google’s advancements in artificial intelligence (AI) will positively impact its second-quarter earnings report, which is expected to be released after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue forecasts for Google, attributing the expected growth to the successful integration of its Gemini AI technology into Google Cloud and AI Overviews in Google Search. They expressed optimism about AI’s broader rollout, stating it could enhance engagement in the Search sector, despite initial challenges faced during its launch, which led to some online ridicule over inaccuracies in AI outputs. The analysts have increased their price target for Google’s stock from $200 to $206.
In April, Google announced a 60% surge in first-quarter profits, largely driven by its AI initiatives, which resulted in a significant stock price increase and pushed its market capitalization beyond $2 trillion, joining other tech giants like Apple, Microsoft, and Nvidia.
Google’s impressive performance was bolstered by a series of AI product launches under its Gemini branding at its developer conference, Google I/O. One notable release was a universal AI assistant designed to operate through a user’s smart glasses. Google has claimed that its latest Gemini AI model operates 20% faster than the most recent version of ChatGPT.
While Dan Ives from Wedbush expressed caution regarding the potential of AI Overviews as a long-term boost for Google’s Search monetization, he acknowledged that AI is currently benefiting Google Cloud. He, along with other analysts, anticipates a 27% year-over-year increase in Cloud revenue.
J.P. Morgan analyst Doug Anmuth echoed the bullish outlook for Google, categorizing it among the firm’s top tech stocks alongside Uber and Amazon, and voiced optimism about the company’s Generative AI advancements ahead of its earnings report.
However, Josh Beck from Raymond James cautioned that while the current narrative surrounding AI is positive, the long-term impact on Google’s sales remains uncertain.