Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings. Alphabet, Google’s parent company, is expected to announce its earnings on Tuesday.
Analysts from both Bank of America and Wedbush have increased their revenue forecasts for Google, citing the integration of its Gemini AI into Google Cloud and AI features in Google Search as catalysts for enhanced sales. They expressed optimism about the potential positive impact of AI on Google’s core search business, despite some initial challenges during the rollout of AI overviews, which garnered some online ridicule for errors and inaccuracies. As a result, they have raised their stock price target for Google from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, largely attributed to its AI initiatives, which resulted in a surge in stock price, elevating its market capitalization beyond $2 trillion, joining giants like Apple, Microsoft, and Nvidia.
Google has been progressively introducing new AI products as part of its Gemini offerings, with the latest unveiling at its Google I/O developer conference featuring a universal AI assistant capable of interacting through smart glasses. Google claims its Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious view regarding AI Overviews, he noted that they might eventually support monetization in search. He also forecasted a significant increase in Google Cloud’s revenue, predicting a 27% growth from the previous year.
Meanwhile, J.P. Morgan’s Doug Anmuth highlighted Google as one of the top technology stocks, alongside Uber and Amazon, stating that he and his team are optimistic about the progress in generative AI ahead of Alphabet’s 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 positive narrative surrounding the technology.