Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively influence its second-quarter earnings. Google’s parent company, Alphabet, is set to release its earnings report this Tuesday.
Bank of America’s Justin Post and Nitin Bansal have lifted their revenue forecasts for Google, suggesting that the integration of the Gemini platform into Google Cloud and the new AI Overviews feature in Google Search will enhance revenue generation. They expressed optimism about the growing AI integrations across Google’s operations, noting that a broader implementation of AI Overviews is likely to increase user engagement in the Search sector, despite some initial stumbling blocks in its rollout, which attracted some criticism online. The analysts adjusted their price target for Google’s shares from $200 to $206.
In its previous earnings report in April, Google experienced a remarkable 60% profit surge in the first quarter, with AI playing a significant role. This positive performance led to a surge in its stock price, propelling the company’s market capitalization above the $2 trillion mark, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s first-quarter success followed a series of new AI product launches as part of its Gemini initiatives. Notably, its recent announcements at the Google I/O developer conference included a futuristic universal AI assistant capable of interacting via a user’s smart glasses. Google claims that its latest Gemini AI operates 20% faster than the current version of ChatGPT.
While Wedbush’s Dan Ives is somewhat cautious about the potential of AI Overviews for immediate revenue boosts, he noted that it could serve as a future advantage for Search monetization. He also acknowledged that AI is already enhancing Google Cloud services, with expectations for a 27% rise in Cloud revenue compared to last year, a sentiment echoed by other analysts on Wall Street.
J.P. Morgan’s Doug Anmuth shared a positive outlook, naming Google among the firm’s top tech stock picks (alongside Uber and Amazon) in anticipation of the upcoming second-quarter earnings report, highlighting positive developments in generative AI. Conversely, Raymond James analyst Josh Beck cautioned that while the current AI narrative for Google is promising, it remains uncertain whether AI will sustainably drive sales growth for the company in the long term.