Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will enhance its earnings for the second quarter, with Alphabet scheduled to release its earnings report after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue forecasts for Google, citing the successful integration of the Gemini AI into Google Cloud and AI Overviews in Google Search as key drivers of increased sales. They expressed optimism about the ongoing development of AI features across Google’s platforms, stating that the wider deployment of AI overviews is likely to stimulate greater engagement in the core Search segment. Despite some initial challenges—when the AI tool faced criticism for generating errors— they raised their price target for Google stock from $200 to $206.
Earlier this year, Google reported a remarkable 60% profit increase in the first quarter, driven in part by AI initiatives, which propelled the company’s market value past the $2 trillion milestone, placing it alongside leading tech giants such as Apple, Microsoft, and Nvidia.
The company’s positive financial performance came after several months of launching new AI products under the Gemini brand. Notably, at the Google I/O developer conference, the tech giant unveiled a futuristic universal AI assistant designed to interact seamlessly with users through smart glasses, claiming this new version of Gemini AI is 20% faster than the latest iteration of ChatGPT.
Meanwhile, Wedbush analyst Dan Ives offered a more cautious perspective on the AI Overviews feature, indicating that it might gradually contribute to search monetization. Nonetheless, he noted that AI is already having a positive impact on Google Cloud, projecting a 27% year-over-year revenue increase in this segment.
J.P. Morgan’s Doug Anmuth shared a similarly positive outlook, naming Google as one of the firm’s top tech stock picks, alongside Uber and Amazon, expressing confidence in the progress of generative AI in anticipation of Alphabet’s upcoming earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding Google’s AI efforts appears optimistic, the long-term impact on sales remains uncertain.