Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will positively influence its earnings for the second quarter. The parent company of Google, Alphabet, is scheduled to announce its earnings on Tuesday evening.
Bank of America analysts Justin Post and Nitin Bansal have adjusted their revenue forecasts for Google upward, highlighting the company’s integration of the Gemini platform into Google Cloud and AI Overviews in Google Search as key contributors to increased sales. Despite some initial challenges with the rollout of AI Overviews, which were met with some online criticism for inaccuracies, the analysts expressed optimism about the improved engagement this feature could bring to Google’s core Search business. They raised their price target for Google shares from $200 to $206.
In its April earnings report, Google revealed a staggering 60% profit increase for the first quarter, significantly aided by AI, which also caused its stock price to rise and its market capitalization to exceed $2 trillion, joining the ranks of other tech giants like Apple, Microsoft, and Nvidia.
The robust first-quarter results followed a series of new AI product launches, including developments showcased at the Google I/O conference. Among these was a new AI assistant capable of interacting through smart glasses, with Google asserting that its latest Gemini AI model is 20% faster than the latest version of ChatGPT.
While Dan Ives of Wedbush offered a more cautious view of AI Overviews compared to Post and Bansal, he noted that it might still contribute positively to Search monetization in the long run. He also mentioned the existing boost AI is providing to Google Cloud, predicting a 27% year-over-year revenue increase for the division.
J.P. Morgan’s Doug Anmuth echoed the positive outlook, recently naming Google a top technology stock alongside Uber and Amazon. He expressed encouragement over the progress in generative AI leading up to Alphabet’s second-quarter earnings announcement.
However, Raymond James analyst Josh Beck cautioned that, despite the current positive sentiment surrounding AI’s impact on Google, the longevity of its influence on sales remains uncertain.