Google is anticipated to see a boost in its second-quarter earnings due to its advancements in artificial intelligence, according to analysts from Wedbush, J.P. Morgan, and Bank of America. The tech giant’s parent company, Alphabet, is expected to announce its earnings results after the market closes on Tuesday.
Both Bank of America and Wedbush have increased their revenue projections for Google. Analysts Justin Post and Nitin Bansal from Bank of America believe that the integration of the Gemini AI system into Google Cloud and the introduction of AI Overviews in Google Search will significantly enhance sales.
In a research note released last week, they expressed optimism about the growing AI implementations within Google’s ecosystem, suggesting that a broader launch of AI Overviews could stimulate greater activity in the core Search business. This comes despite some initial challenges with the AI Overviews, which faced criticism online for inaccuracies. They also raised their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, largely attributed to its AI initiatives. This resulted in a surge in its stock price, elevating the company’s market capitalization beyond $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The strong first-quarter performance followed numerous launches of new AI products, particularly through its Gemini AI offerings, highlighted during the Google I/O developer conference. Among the latest announcements was a universal AI assistant designed to interact through smart glasses, with Google asserting that its Gemini AI is 20% faster than the latest version of ChatGPT.
Dan Ives from Wedbush offered a more cautious view on AI Overviews but noted their potential to benefit Search monetization over time. He also mentioned that AI is already contributing positively to Google Cloud, predicting a 27% revenue increase from the previous year.
J.P. Morgan analyst Doug Anmuth also shared a positive outlook, identifying Google as one of its top tech stock picks, alongside Uber and Amazon, while expressing excitement about progress in Generative AI prior to Alphabet’s earnings report.
Raymond James analyst Josh Beck cautioned, however, that while the current AI developments appear promising, the long-term impact of AI on Google’s sales remains uncertain.