Analysts from Wedbush, J.P. Morgan, and Bank of America believe that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings, with Alphabet set to announce its financial results on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, attributing potential sales growth to the integration of Gemini into Google Cloud and improvements in AI Overviews within Google Search. They emphasized their confidence in the ongoing AI integrations, suggesting that a wider adoption of AI Overviews could enhance activity in the core Search business, despite initial challenges during rollout. They have adjusted their stock price target for Google from $200 to $206.
In April, Google reported an impressive 60% rise in profits for the first quarter, significantly aided by AI developments. This success saw the company’s stock surge, elevating its market value beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The positive first-quarter results followed several months of launching new AI products as part of the Gemini AI suite. Notable announcements from Google’s recent developer conference, Google I/O, included a futuristic AI assistant capable of visual and spoken interaction through smart glasses. Google claims the new Gemini AI operates at 20% faster speeds than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious view on AI Overviews, he noted the potential for it to support Search monetization in the future. He also highlighted the current positive impact of AI on Google Cloud, anticipating a 27% increment in Cloud revenue year-over-year.
J.P. Morgan’s Doug Anmuth reinforced the optimistic outlook, naming Google as one of the firm’s top tech stock picks, alongside Uber and Amazon. He also expressed encouragement regarding the progress in generative AI in anticipation of Alphabet’s earnings report.
Conversely, analyst Josh Beck from Raymond James cautioned that, although the current narrative surrounding Google’s AI is favorable, the long-term effects of AI on the company’s sales remain uncertain.