Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its second-quarter earnings. Alphabet, Google’s parent company, is expected to release its earnings report on Tuesday.
Nvidia is currently experiencing one of its most tumultuous weeks in the stock market. Amid this volatility, analysts from Bank of America and Wedbush have elevated their revenue forecasts for Google. Bank of America analysts Justin Post and Nitin Bansal attribute this boost to the company’s integration of Gemini with Google Cloud and AI Overviews in Google Search, which they believe will elevate sales figures.
In a recent research note, they expressed optimism regarding Google’s increasing AI integrations and suggested that the wider rollout of AI features could enhance activity within the core Search business. This comes despite earlier challenges with AI Overviews, which garnered some negative attention due to errors in its initial launch. Post and Bansal have increased their price targets for Google stock from $200 to $206.
Earlier this year, Google reported a remarkable 60% surge in its profits for the first quarter, aided in part by AI developments. This stellar performance caused a significant rise in its stock price, pushing its market capitalization above the $2 trillion mark, placing it alongside industry giants like Apple, Microsoft, and Nvidia.
Google’s strong first-quarter results followed a series of new AI product launches as part of its Gemini offerings. At its recent Google I/O developer conference, the company introduced a future universal AI assistant that could interact through a user’s smart glasses. Google claims its latest Gemini AI operates 20% faster than the latest version of ChatGPT.
Dan Ives from Wedbush expressed a more cautious outlook on AI Overviews compared to other analysts, but he noted their potential to contribute positively to Search monetization over time. Ives also indicated that AI is already impacting Google Cloud revenue positively. Like many of his Wall Street peers, he anticipates a 27% revenue increase for Google Cloud compared to last year.
J.P. Morgan’s Doug Anmuth echoed the optimistic view and highlighted Google as one of the investment firm’s top technology stocks, alongside Uber and Amazon. He noted that his team is “encouraged by GenAI progress” in anticipation of Alphabet’s upcoming earnings report.
However, Raymond James analyst Josh Beck cautioned that while the present AI narrative for Google appears promising, the long-term impact of AI on Google’s sales remains uncertain.