Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google will see a boost in its second-quarter earnings, attributed to its advancements in artificial intelligence. Alphabet, Google’s parent company, is expected to announce its earnings after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have raised their revenue forecasts for Google, highlighting the integration of Gemini into Google Cloud and AI Overviews in Google Search as key drivers of sales growth. Despite initial challenges with the rollout of AI Overviews, which garnered some online ridicule for inaccuracies, they remain optimistic, increasing their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, largely due to its AI initiatives, leading to a rise in its stock price and boosting its market capitalization past the $2 trillion mark, joining tech giants like Apple, Microsoft, and Nvidia.
Google’s positive first-quarter outcomes followed a series of new AI product launches, particularly from its Gemini AI platform. Notable announcements at the recent Google I/O developer conference included a universal AI assistant capable of interacting through smart glasses, with claims that the new Gemini AI is 20% faster than the latest version of ChatGPT.
Dan Ives from Wedbush expressed a more cautious view on AI Overviews compared to his colleagues but acknowledged that it could contribute positively to Search monetization over time. He also noted that Google’s Cloud revenue is expected to see a 27% growth from the previous year, driven by AI advancements.
Doug Anmuth from J.P. Morgan shared a similar outlook, considering Google as a top tech stock alongside Uber and Amazon, and highlighting optimism regarding the progress in generative AI ahead of Alphabet’s earnings release.
However, Raymond James analyst Josh Beck cautioned that while the current narrative around Google’s AI is favorable, the long-term impact on sales remains uncertain.