Analysts from Wedbush, J.P. Morgan, and Bank of America believe that Google’s advancements in artificial intelligence will positively impact its earnings for the second quarter, which will be reported after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, highlighting how the integration of Gemini into Google Cloud and AI features in Google Search are expected to enhance sales. They express optimism about the potential for increased activity in the Search business due to broader AI implementations, despite earlier issues with the rollout of AI overviews that led to some humorous internet reactions regarding inaccuracies produced by the tool. They raised their stock price target for Google from $200 to $206.
In its April earnings report, Google revealed a remarkable 60% profit increase in the first quarter, partly attributed to its AI initiatives, which drove the company’s market capitalization beyond $2 trillion, joining tech giants like Apple, Microsoft, and Nvidia.
Google’s strong first-quarter results followed a series of new AI product launches under its Gemini offerings, including an innovative AI assistant showcased at its developer conference, Google I/O, which is designed to operate through smart glasses. Google also claims that the latest version of Gemini AI is 20% faster than the most recent ChatGPT.
While Wedbush’s Dan Ives expressed some skepticism regarding the long-term impact of AI Overviews on Search monetization, he acknowledged that AI is already contributing positively to Google Cloud revenue, with expectations of a 27% year-over-year increase.
J.P. Morgan analyst Doug Anmuth shared a similar optimistic view, naming Google as one of the top tech stocks alongside Uber and Amazon, and noted the promising developments in generative AI before Alphabet’s upcoming earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current AI narrative for Google appears favorable, the sustainability of its impact on long-term sales remains uncertain.