Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings. Alphabet, Google’s parent company, is expected to announce its earnings after the market closes on Tuesday.
Bank of America’s analysts, Justin Post and Nitin Bansal, have raised their revenue forecasts for Google, noting that the incorporation of Gemini into Google Cloud and the AI Overviews in Google Search will likely enhance sales. They expressed optimism about the expanding AI capabilities within Google’s ecosystem, suggesting that a broader implementation of AI overviews may lead to heightened activity in the Search business. Despite some initial issues during the rollout of AI overviews, which faced criticism online for inaccuracies, the analysts increased their price target for Google’s stock from $200 to $206.
In its first quarter, Google reported a remarkable 60% profit surge, largely attributed to AI contributions. This performance boosted the company’s stock price significantly, elevating its market value above $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s impressive quarterly results followed several new releases in its Gemini AI product line. At the Google I/O developer conference, the company introduced a universal AI assistant that can interact through a user’s smart glasses, and it claims the new Gemini AI operates 20% faster than the latest version of ChatGPT.
Dan Ives from Wedbush expressed a more tempered view of AI Overviews than Post and Bansal, suggesting it might serve as a positive factor for Search monetization eventually. He also noted that AI is already contributing to Google Cloud’s growth, predicting a 27% rise in Cloud revenue compared to last year.
Doug Anmuth of J.P. Morgan echoed the optimistic outlook, highlighting Google as one of their top technology stock picks, alongside Uber and Amazon, and expressing enthusiasm about the progress in Generative AI in anticipation of Alphabet’s earnings report.
However, Josh Beck from Raymond James cautioned that, while the current narrative surrounding AI is favorable, it remains uncertain whether it will lead to sustained long-term sales growth for Google.