Analysts from Wedbush, J.P. Morgan, and Bank of America suggest that Google’s advancements in artificial intelligence are likely to enhance its earnings for the second quarter. Alphabet, Google’s parent company, is scheduled to release its earnings report on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue forecasts for Google, attributing the optimistic outlook to the integration of Gemini into Google Cloud and AI features in Google Search. They believe that the expanded use of AI across Google’s platforms will contribute to increased activity in its core Search business, despite some initial issues with AI overviews that faced criticism online. They have also adjusted their price target for Google’s stock from $200 to $206.
In April, Google announced a remarkable 60% increase in profits for the first quarter, largely driven by AI innovations, resulting in its stock price rising and the company’s market valuation surpassing $2 trillion, alongside Apple, Microsoft, and Nvidia.
Google’s strong performance earlier in the year followed a series of AI product launches, including innovative features introduced at the Google I/O developer conference, such as an advanced AI assistant capable of operating through smart glasses. Google claims its latest Gemini AI is significantly faster than ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious view on AI Overviews, he noted that they could eventually support monetization in the Search division. He also indicated that AI is already positively impacting Google Cloud, projecting a 27% increase in its Cloud revenue compared to last year.
J.P. Morgan analyst Doug Anmuth highlighted Google’s progress with generative AI, naming it among his firm’s top tech stock picks, which also include Uber and Amazon. However, analyst Josh Beck from Raymond James cautioned that, despite the current favorable AI narrative for Google, the long-term impact on sales remains uncertain.