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. Alphabet, Google’s parent company, is scheduled to announce its earnings on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue projections for Google, citing the integration of its Gemini AI into Google Cloud and enhanced AI features in Google Search as key sales drivers. They expressed optimism about the increasing use of AI across Google’s services, noting that a wider deployment of AI tools could lead to increased user engagement in Search despite some early challenges in the rollout of these features. The analysts also raised their stock price target for Google from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, largely attributed to its AI innovations, resulting in a surge in its stock price and elevating its market capitalization beyond $2 trillion, placing it among tech giants like Apple, Microsoft, and Nvidia.
Over the past months, Google has launched various AI products as part of its Gemini initiative. Notably, at its recent developer conference, Google unveiled a forward-looking AI assistant that aims to interact via smart glasses, claiming that the new Gemini technology is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed cautious optimism regarding AI Overviews’ impact on monetization in Search, he noted that AI is already enhancing Google Cloud’s performance. He, like many analysts, predicts a 27% increase in Cloud revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth joined the chorus of positive assessments, designating Google as one of its top technology stock picks, alongside Uber and Amazon, expressing a favorable outlook on the progress in Generative AI prior to the upcoming earnings report. However, Raymond James analyst Josh Beck cautioned that the long-term impact of AI on Google’s sales remains uncertain despite the current optimism.