Analysts from Wedbush, J.P. Morgan, and Bank of America suggest that Google’s advancements in artificial intelligence could enhance its earnings for the second quarter, as the company prepares to announce its earnings on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have adjusted their revenue forecasts for Google, crediting the integration of Gemini into Google Cloud and AI Overviews within Google Search for the potential sales boost. They expressed optimism about the growing AI features across Google’s platform, believing that a wider implementation of AI overviews could lead to increased activity in the core Search business, despite some initial issues during rollout which attracted internet criticism. Post and Bansal have also upped their price target for Google’s shares from $200 to $206.
In April, Google reported a remarkable 60% profit increase for the first quarter, aided in part by its AI developments, resulting in a surge in its stock price and pushing its market capitalization past the $2 trillion threshold, joining tech giants Apple, Microsoft, and Nvidia.
This successful first quarter came on the heels of numerous new artificial intelligence product launches, including announcements made at this year’s Google I/O conference, which featured a futuristic universal AI assistant capable of interacting through smart glasses. Google boasts that its latest iteration of Gemini AI is 20% quicker than the newest version of ChatGPT.
While Wedbush analyst Dan Ives expressed caution regarding AI Overviews, asserting that they might take time to positively impact Search monetization, he noted that AI is already enhancing Google Cloud, anticipating a 27% revenue increase for the Cloud segment compared to the previous year.
J.P. Morgan’s Doug Anmuth further echoed the favorable perspectives on Google, identifying the company as one of the top tech investments alongside Uber and Amazon, and highlighting the progress in generative AI ahead of Alphabet’s upcoming earnings report. Conversely, Raymond James analyst Josh Beck cautioned that, despite the current positive sentiment surrounding AI at Google, the long-term impact on sales remains uncertain.