Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s AI advancements will positively impact its earnings for the second quarter. Google’s parent company, Alphabet, is scheduled to release its earnings report after the market closes on Tuesday.
Following a delivery partnership with Uber, shares of Darden Restaurants surged. Bank of America analysts Justin Post and Nitin Bansal have revised their revenue forecasts for Google, highlighting that the integration of the Gemini AI system into Google Cloud and the new AI Overviews feature in Google Search is expected to enhance sales figures.
They expressed optimism in a recent research note, stating, “We remain positive on growing AI integrations across Google’s ecosystem and believe that the wider deployment of AI overviews will stimulate increased activity in the core Search business,” notwithstanding some challenges during the initial rollouts where the AI tool faced criticism for inaccuracies. The analysts increased their price target for Google’s stock from $200 to $206.
In April, Google announced a remarkable 60% increase in profits during the first quarter, largely attributed to its AI initiatives, which resulted in a significant rise in its stock price and pushed its market capitalization above the $2 trillion mark, placing it alongside industry giants such as Apple, Microsoft, and Nvidia.
Google’s strong first-quarter results followed months of releasing new AI products as part of its Gemini AI series. At the recent Google I/O developer conference, the company introduced an innovative AI assistant designed to interact through smart glasses. Google claims that its latest Gemini AI is 20% faster than the latest version of ChatGPT.
Dan Ives from Wedbush was more reserved regarding the potential of AI Overviews compared to Post and Bansal, suggesting that it might eventually benefit Search monetization. Ives noted that AI is already contributing positively to Google Cloud revenues, predicting a 27% year-over-year increase in this segment.
Doug Anmuth from J.P. Morgan shared a similar positive outlook, naming Google as one of the firm’s top tech stock picks, along with Uber and Amazon, and expressing excitement about the progress in Generative AI as the company approaches its second-quarter earnings announcement.
Raymond James analyst Josh Beck cautioned that while the current narrative surrounding Google’s AI is optimistic, the long-term implications for sales growth remain uncertain.