Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic that Google’s advancements in artificial intelligence will enhance its second-quarter earnings. Alphabet, Google’s parent company, is expected to announce its earnings on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal raised their revenue forecasts for Google, citing the integration of Gemini into Google Cloud and AI Overviews in Google Search as factors likely to boost sales. They expressed confidence in the expanding AI features across Google’s ecosystem, suggesting that a wider implementation of AI overviews could increase activity in Google’s core Search business. Despite some earlier issues with AI overviews, which captured public attention for inaccuracies, they adjusted their price target for Google’s stock from $200 to $206.
Earlier this year, Google reported a remarkable 60% surge in profits in the first quarter, aided by its AI developments, which drove its stock price up, lifting the company’s market capitalization above $2 trillion—joining the ranks of Apple, Microsoft, and Nvidia.
This strong performance followed a series of new AI product launches as part of the Gemini offerings. At the recent Google I/O developer conference, the company unveiled a future AI assistant capable of interacting through smart glasses. Google claims its latest Gemini AI operates 20% faster than the newest version of ChatGPT.
While Wedbush’s Dan Ives has a more cautious outlook on AI Overviews compared to Post and Bansal, he noted that this feature may positively impact Search monetization over time. He highlighted that AI is already contributing to the success of Google Cloud and anticipates a 27% increase in Cloud revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth shared a positive view, branding Google as one of the firm’s top tech picks, alongside Uber and Amazon. He expressed optimism about the company’s progress in generative AI leading up to Alphabet’s second-quarter earnings.
However, Raymond James analyst Josh Beck cautioned that, despite the current positive narrative surrounding AI, the long-term impact of AI on Google’s sales remains uncertain.