Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will enhance its second-quarter earnings. Alphabet, Google’s parent company, is scheduled to announce its earnings on Tuesday.
Both Bank of America and Wedbush have updated their revenue projections for Google. Justin Post and Nitin Bansal of Bank of America believe the introduction of Gemini into Google Cloud and AI Overviews in Google Search will contribute positively to sales. They expressed optimism regarding the integration of AI across Google’s services and anticipate that expanded AI overviews will lead to increased user engagement in the Search division. Despite early challenges with AI overviews, which drew criticism online for their inaccuracies, they have raised their stock price target for Google from $200 to $206.
In its first quarter, Google reported a 60% profit increase due to AI advancements, prompting a rise in its stock price and pushing the company’s market cap beyond $2 trillion alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s strong first-quarter results followed a string of new AI product launches as part of its Gemini offerings. Notable announcements from the recent Google I/O developer conference included a future AI assistant capable of interacting through smart glasses, with Google claiming its Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed a tempered view on the immediate impact of AI Overviews, he suggested it might support Search monetization over time and noted that AI is already having a positive effect on Google Cloud. He and other analysts expect a 27% rise in Cloud revenue compared to last year.
Doug Anmuth from J.P. Morgan shared a similar optimistic outlook, listing Google among its top tech stock picks, alongside Uber and Amazon, and highlighting the promising developments in generative AI ahead of Alphabet’s earnings report.
However, Josh Beck of Raymond James cautioned that although the current narrative surrounding Google’s AI is optimistic, the long-term impact on sales remains uncertain.