Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s recent advancements in artificial intelligence are set to enhance its second-quarter earnings. Alphabet, Google’s parent company, is scheduled to announce its earnings after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have adjusted their revenue forecasts upward, crediting the integration of Gemini into Google Cloud and the introduction of AI overviews in Google Search for potential sales boosts. In a research note, they expressed optimism about Google’s AI developments and suggested that wider use of AI overviews could increase activity in the core Search business, despite initial challenges with the AI tool. They raised their price forecast for 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, leading to a stock price surge that pushed its market capitalization beyond $2 trillion, joining tech giants like Apple, Microsoft, and Nvidia.
The impressive first-quarter results followed the launch of several new AI products as part of the Gemini AI suite. Notably, Google showcased a next-generation universal AI assistant at its developer conference, Google I/O, which can interact through smart glasses. Google claims its latest Gemini AI model is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives appeared less optimistic about the potential of AI Overviews, he acknowledged that it could positively impact Search monetization in the future. He also mentioned that AI is already benefiting Google Cloud, forecasting a 27% revenue increase from the previous year.
J.P. Morgan analyst Doug Anmuth shared a similarly optimistic outlook, naming Google among the investment firm’s top technology stocks, alongside Uber and Amazon, as he noted progress in generative AI ahead of Alphabet’s earnings release.
However, Raymond James analyst Josh Beck cautioned that, despite the current positive narrative surrounding AI’s impact on Google, its long-term effect on sales remains uncertain.