Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence are likely to enhance its second-quarter earnings. Google’s parent company, Alphabet, is scheduled to release its earnings report on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have revised their revenue projections for Google, attributing potential sales increases to the integration of Gemini into Google Cloud and new AI features in Google Search. They expressed optimism in a recent research note, indicating that expanding AI capabilities in Google’s ecosystem could boost activity in its core Search business, despite some challenges during the initial introduction of AI features, which initially faced criticism for inaccuracies. They have raised their price target for Google’s stock from $200 to $206.
In April, Google experienced a significant 60% increase in profits for the first quarter, largely due to its investments in AI, which resulted in its stock price climbing and its market capitalization exceeding $2 trillion – placing it alongside tech giants like Apple, Microsoft, and Nvidia.
The company’s strong performance in the first quarter followed months of releasing new AI products under its Gemini AI umbrella. Notable announcements during the recent Google I/O developer conference included a futuristic AI assistant capable of interacting through smart glasses. Google claims that its latest Gemini AI is 20% faster than the most recent version of ChatGPT.
While Wedbush’s Dan Ives expressed some reservations about the long-term impact of AI Overviews, he acknowledged its potential to enhance Search monetization gradually. He highlighted that AI is already having a positive impact on Google Cloud, predicting a 27% increase in Cloud revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth echoed this optimism, ranking Google among the firm’s top tech stock choices alongside Uber and Amazon, expressing encouragement over progress in generative AI prior to Alphabet’s earnings announcement. However, Raymond James analyst Josh Beck cautioned that, while the AI narrative surrounding Google appears favorable now, the long-term impact of AI on sales remains uncertain.