Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its second-quarter earnings, as the company prepares to release its earnings report after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue projections for Google, citing the integration of Gemini into Google Cloud and AI Overviews in Google Search as key factors expected to boost sales. They noted in a recent research statement that they remain optimistic about the growing integration of AI within Google’s ecosystem, believing that the broader implementation of AI Overviews will contribute to higher activity in the core Search business, despite some early issues with the tool leading to online ridicule. Post and Bansal have also raised their stock price target for Google from $200 to $206.
In its previous earnings report in April, Google announced a significant 60% profit increase in the first quarter, which was largely attributed to its AI innovations. This result led to a surge in its stock price, propelling the company’s market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
This positive first-quarter performance followed a series of releases related to Google’s Gemini AI initiative. Notably, during the recent Google I/O developer conference, the company unveiled a universal AI assistant designed to interact through users’ smart glasses, claiming it operates 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious view on AI Overviews, he acknowledged that it could become beneficial for Search monetization in the long run. Ives also highlighted that AI has already begun to positively influence Google Cloud, projecting a 27% revenue increase in that segment compared to last year.
Doug Anmuth from J.P. Morgan echoed these positive sentiments, naming Google as one of the firm’s top tech stock picks alongside Uber and Amazon, with a focus on the advancements in generative AI in anticipation of Alphabet’s forthcoming earnings report.
However, Raymond James analyst Josh Beck cautioned that, although the current AI developments at Google are promising, the long-term impact on the company’s sales remains uncertain.