Analysts at Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its performance in the upcoming second-quarter earnings report, scheduled for release after the market closes on Tuesday.
Both Bank of America and Wedbush raised their revenue forecasts for Google, with Bank of America’s Justin Post and Nitin Bansal highlighting the positive impact of integrating Gemini into Google Cloud and AI Overviews in Google Search. They expressed optimism in a recent research note, suggesting that a broader implementation of AI tools could drive increased activity in Google’s core Search business, despite some initial issues the tool faced during its rollout. As a result, they have adjusted their price target for Google’s stock from $200 to $206.
Google’s first-quarter results revealed a remarkable 60% profit increase, attributed in part to AI innovations. This impressive performance led to a surge in its stock price, elevating the company’s market capitalization beyond the $2 trillion benchmark, joining the ranks of Apple, Microsoft, and Nvidia.
The positive momentum in Google’s stock followed multiple product launches related to its Gemini AI initiative. During the recent Google I/O developer conference, the company unveiled a universal AI assistant designed to operate with smart glasses. Google also claims its latest Gemini AI model is 20% faster than the most recent version of ChatGPT.
However, not all analysts share the same level of enthusiasm about AI Overviews. Wedbush’s Dan Ives expressed a more cautious perspective, suggesting that while it could eventually boost Search monetization, its immediate impact remains uncertain. He acknowledged that AI is already contributing positively to Google Cloud, forecasting a 27% revenue increase for this segment compared to last year.
J.P. Morgan’s Doug Anmuth shared the overall positive outlook, designating Google as one of the firm’s top technology stock picks, alongside Uber and Amazon. He noted excitement regarding the advances in Generative AI as Alphabet approaches its second-quarter earnings announcement.
On the other hand, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding AI looks promising for Google, the long-term effects on sales remain uncertain.