Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will enhance the company’s second-quarter earnings. Alphabet, Google’s parent company, is scheduled to release its earnings report on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue projections for Google, attributing this optimism to the integration of Gemini into Google Cloud and AI Overviews in Google Search, which they believe will increase sales. They noted that despite some initial issues with the AI overviews, which faced criticism for inaccuracies, the overall sentiment towards Google’s AI capabilities remains positive. They have adjusted their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, driven in part by its AI initiatives. This financial success resulted in a surge in stock price, raising the company’s market capitalization above $2 trillion, aligning it with other tech giants like Apple, Microsoft, and Nvidia.
Following the introduction of various new AI products, notably during the Google I/O developer conference, the company continues to unveil its Gemini AI offerings. The latest innovations include a next-generation AI assistant capable of interacting through smart glasses, with Google asserting that their latest version of Gemini AI outperforms the newest ChatGPT by 20% in speed.
While Wedbush analyst Dan Ives expressed some caution regarding the long-term impact of AI Overviews on Google’s revenue from Search, he acknowledged the current positive effects of AI on Google Cloud services. Ives, along with other analysts, expects Google to report a 27% year-over-year increase in Cloud revenue.
Doug Anmuth from J.P. Morgan echoed these optimistic projections, designating Google as one of their top tech stocks, alongside Uber and Amazon, and expressing enthusiasm about the company’s generative AI progress ahead of its upcoming earnings report. However, Josh Beck from Raymond James cautioned that while the present outlook for Google’s AI is favorable, the long-term sales impact still remains uncertain.