Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively influence its second-quarter earnings. Alphabet, Google’s parent company, is scheduled to announce its earnings after the market closes on Tuesday.
Stock in Trump Media declined by 7% following the announcement of another quarterly loss.
Bank of America analysts Justin Post and Nitin Bansal have adjusted their revenue forecasts for Google, citing the integration of the Gemini AI with Google Cloud and AI Overviews in Google Search as key factors in boosting sales. They expressed optimism about the expanding role of AI within Google’s operations, believing that the broader implementation of AI Overviews will encourage greater user engagement with its search services, despite some initial challenges that prompted internet ridicule over inaccuracies.
In April, Google reported a remarkable 60% increase in profits for the first quarter, partly attributed to its AI initiatives, which resulted in a significant rise in its stock price and elevated its market capitalization beyond $2 trillion, placing it among tech giants like Apple, Microsoft, and Nvidia.
The company’s strong quarterly results followed the launch of multiple AI products as part of the Gemini AI initiative. During the Google I/O developer conference, a new AI assistant capable of interacting with users through smart glasses was showcased, and Google claimed its updated Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious outlook regarding the potential of AI Overviews for immediate monetization, he noted that AI is already enhancing Google Cloud services. He anticipates a 27% year-over-year increase in Cloud revenue for the company.
Doug Anmuth from J.P. Morgan also reinforced the positive outlook, identifying Google as one of his firm’s top tech stock picks, alongside Uber and Amazon, and highlighting enthusiasm for Google’s advancements in generative AI leading up to the forthcoming quarterly earnings report.
However, Josh Beck from Raymond James offered a word of caution, suggesting that, although the current narrative surrounding Google’s AI capabilities is favorable, the long-term impact on sales remains uncertain.