Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will positively influence its upcoming second-quarter earnings report. Alphabet, Google’s parent company, is expected to release its earnings results on Tuesday.
Both Bank of America and Wedbush have increased their revenue forecasts for Google, citing the integration of its Gemini technology into Google Cloud and the AI Overviews in Google Search as significant sales drivers. Bank of America’s analysts Justin Post and Nitin Bansal stated that they view the expansion of AI integrations throughout Google’s services favorably and believe that a more extensive implementation of AI overviews will enhance activity in Search, despite some early challenges with the tool which faced public scrutiny for inaccuracies. They have adjusted their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase for the first quarter, with AI playing a crucial role in this success. As a result, the company’s stock surged, elevating its market capitalization above $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The optimistic performance in the first quarter followed months of innovative AI product launches associated with its Gemini offerings. At the recent Google I/O developer conference, Google introduced a future universal AI assistant capability that could interact through users’ smart glasses. Google claims that its latest version of Gemini is 20% faster than the latest ChatGPT model.
While Wedbush’s Dan Ives expressed a more cautious outlook on AI Overviews compared to his peers, he acknowledged that it could potentially support Search monetization in the long run. Additionally, Ives noted that AI is already providing benefits to Google Cloud, forecasting a 27% revenue growth for Google Cloud compared to the previous year.
J.P. Morgan’s Doug Anmuth shared a similar optimistic view, naming Google among the firm’s top technology stocks alongside Uber and Amazon. He expressed enthusiasm for the progress in Generative AI ahead of Alphabet’s earnings announcement.
However, Raymond James analyst Josh Beck provided a note of caution, stating that while the current AI narrative for Google appears positive, the long-term impact of AI on the company’s sales remains uncertain.