Google’s advancements in artificial intelligence are poised to enhance its earnings for the second quarter, as suggested by analysts from Wedbush, J.P. Morgan, and Bank of America. The parent company Alphabet is set to announce its earnings on Tuesday.
Analysts from both Bank of America and Wedbush have raised their revenue projections for Google. Justin Post and Nitin Bansal from Bank of America believe that Google’s integration of its Gemini AI into Google Cloud and AI Overviews in Google Search will increase sales. They expressed optimism about the expanding AI integrations across Google’s ecosystem, highlighting that a wider rollout of AI overviews could boost user engagement in the core Search operations. Despite some issues during the initial launch of AI overviews, which attracted online criticism for inaccuracies, they increased their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% rise in profits for the first quarter, largely attributed to AI developments. This strong performance led to a surge in the company’s stock price, elevating its market capitalization beyond the $2 trillion mark, joining peers like Apple, Microsoft, and Nvidia.
Google’s first-quarter success came after a series of new AI product launches under its Gemini initiative. Notable unveilings at the recent Google I/O developer conference included a prospective AI assistant capable of interacting through smart glasses. Google claims its latest Gemini AI operates 20% faster than the newest version of ChatGPT.
While Dan Ives of Wedbush expressed some caution about the impact of AI Overviews, noting that it might only gradually support Search monetization, he acknowledged that AI is already contributing positively to Google Cloud. He, along with other analysts, expects Google to report a 27% increase in Cloud revenue compared to the previous year.
Doug Anmuth from J.P. Morgan shared a similarly upbeat perspective and listed Google among the investment firm’s top technology stocks, alongside Uber and Amazon, noting optimism surrounding advancements in GenAI ahead of the upcoming earnings release. Conversely, analyst Josh Beck from Raymond James cautioned that while the current narrative around AI is favorable, its potential to drive sustained sales growth for Google remains uncertain.