Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advances in artificial intelligence will positively impact its second-quarter earnings, which are set to be announced after market close on Tuesday.
Bank of America’s Justin Post and Nitin Bansal have adjusted their revenue projections for Google upward, citing the integration of the Gemini platform into Google Cloud and AI Overviews in Google Search as key factors that will enhance sales. They expressed optimism about the AI developments across Google’s services, stating that the broader application of AI in search functionalities could lead to increased user engagement, despite initial challenges faced during the rollout of AI Overviews. They upgraded their stock price target for Google from $200 to $206.
In its first quarter, Google reported a remarkable profit increase of 60%, significantly fueled by AI innovations. This surge prior had already propelled its stock value, elevating the company’s market capitalization to over $2 trillion and placing it among other tech giants like Apple, Microsoft, and Nvidia.
This strong performance can be attributed to a series of new AI product launches linked to the Gemini initiative. At its recent developer conference, Google introduced an ambitious universal AI assistant designed to operate through smart glasses, claiming it to be 20% faster than the latest version of ChatGPT.
Dan Ives from Wedbush expressed a more cautious view on the impact of AI Overviews but acknowledged that their influence could positively affect search-related monetization over time. He also noted that AI developments are already benefiting Google Cloud, projecting a 27% year-over-year growth in revenue for that segment.
Doug Anmuth from J.P. Morgan also shared a positive outlook and designated Google as one of the top technology investment picks alongside Uber and Amazon, encouraged by the advancements in Generative AI ahead of the earnings report.
However, Josh Beck from Raymond James cautioned that while the current narrative surrounding Google’s AI is promising, the long-term effect of AI on the company’s sales remains uncertain.