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. The parent company, Alphabet, is slated to announce its earnings on Tuesday.
Following evaluations, Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue forecasts for Google. They believe that integrating the Gemini AI into Google Cloud and enhancing AI Overviews in Google Search will drive sales growth. In a recent research note, they expressed optimism about the expanding AI features across Google’s ecosystem, stating that a wider implementation of AI overviews should stimulate increased activity in the core Search segment. Despite some initial challenges with AI overviews, which attracted jokes online due to inaccuracies, they have raised their stock price target for Google from $200 to $206.
In April, Google reported a remarkable 60% surge in profits for the first quarter, attributed partially to AI developments. This success led to a significant rise in its stock price, elevating the company’s market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The strong performance in the first quarter followed a series of new AI product launches as part of Google’s Gemini offerings. Among the latest innovations presented at the Google I/O developer conference was a futuristic AI assistant capable of visual interaction through smart glasses, with Google claiming that its latest Gemini AI operates 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed cautious optimism regarding AI Overviews, suggesting they may eventually support Search monetization, he noted AI’s immediate positive impact on Google Cloud. Ives, like other analysts, anticipates a 27% rise in Cloud revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth also shared a positive outlook, naming Google as one of their top tech stock picks alongside Uber and Amazon, and expressing encouragement over developments in Generative AI ahead of Alphabet’s earnings report. However, Raymond James analyst Josh Beck cautioned that while the current excitement surrounding AI for Google is promising, the long-term effects on sales remain uncertain.