Analysts from Wedbush, J.P. Morgan, and Bank of America project that Google’s advancements in artificial intelligence will enhance its second-quarter earnings, which will be reported after market close on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue forecasts for Google, attributing this to the integration of Gemini into Google Cloud and the implementation of AI Overviews in Google Search, which they believe will increase sales. They expressed optimism about the AI developments within Google’s ecosystem, stating that a wider rollout of AI Overviews is likely to drive more engagement in the core Search business, despite some initial challenges that led to internet ridicule due to inaccuracies in the tool’s outputs. They have adjusted their price target for Google’s stock from $200 to $206.
In April, Google announced a remarkable 60% profit increase for the first quarter, partially credited to its AI initiatives, which propelled its stock price and market capitalization beyond the $2 trillion mark, placing it alongside Apple, Microsoft, and Nvidia.
Following the introduction of new AI products under its Gemini offerings, Google also showcased an advanced universal AI assistant at its developer conference, Google I/O, capable of interacting through smart glasses. The company claims that its latest Gemini AI is 20% faster than the latest version of ChatGPT.
Wedbush analyst Dan Ives expressed a more cautious view on AI Overviews, suggesting that while it could provide a long-term boost to Search monetization, it is currently unclear. He noted that AI is already positively impacting Google Cloud, forecasting a 27% increase in Cloud revenue from the previous year.
J.P. Morgan analyst Doug Anmuth reiterated the positive outlook and included Google among the firm’s top tech stock picks, alongside Uber and Amazon. He mentioned that his team is optimistic about the progress in generative AI ahead of Alphabet’s second-quarter earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current focus on AI is beneficial for Google, the long-term impact on sales remains uncertain.