Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its earnings for the second quarter. Alphabet, Google’s parent company, is scheduled to release its earnings report on Tuesday.
Bank of America’s analysts Justin Post and Nitin Bansal have updated their revenue projections for Google, attributing the expected growth to the integration of Gemini AI into Google Cloud and AI Overviews in Google Search. They expressed optimism about the broader deployment of AI features, which they believe will increase activity in Google’s core Search business, despite initial challenges with the AI Overviews.
In April, Google reported a staggering 60% profit increase in the first quarter, largely due to its AI developments, which propelled its stock price and boosted its market capitalization to over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
Google’s strong performance followed numerous launches of new AI products associated with its Gemini AI suite, including a futuristic universal AI assistant capable of interacting through smart glasses. The company claims its latest Gemini AI is faster than the newest version of ChatGPT.
Wedbush’s Dan Ives expressed a more cautious view on AI Overviews compared to his peers, suggesting that while it may eventually aid monetization in Search, its impact is still to be observed. However, he noted that AI has already been beneficial for Google Cloud, projecting a 27% revenue increase in that segment compared to last year.
J.P. Morgan’s Doug Anmuth shared a similarly positive outlook, listing Google among his top technology stock picks alongside Uber and Amazon, citing optimism regarding progress in Generative AI ahead of the earnings report.
Meanwhile, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding AI at Google appears favorable, the long-term effects on sales remain uncertain.