Analysts from Wedbush, J.P. Morgan, and Bank of America suggest that Google’s advancements in artificial intelligence will contribute positively to its second-quarter earnings, set to be reported after the bell on Tuesday. They have raised their revenue projections for the company, with Bank of America’s Justin Post and Nitin Bansal highlighting the anticipated benefits of integrating the Gemini AI platform into Google Cloud and enhanced AI overviews in Google Search.
In a recent research note, Post and Bansal expressed optimism about the role of AI across Google’s services, stating that the wider implementation of AI overviews is likely to increase engagement within the core Search division, despite some initial issues where the tool faced criticism for inaccuracies. Consequently, they adjusted their price target for Google’s stock from $200 to $206.
Following a remarkable 60% profit increase in the first quarter of this year, attributed largely to its AI developments, Google saw its market capitalization exceed $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The company’s impressive performance came after a series of AI product launches linked to its Gemini initiatives. At the most recent Google I/O developer conference, it unveiled a futuristic AI assistant designed to interact through smart glasses. Google claims its latest Gemini AI boasts a processing speed that is 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives maintained a more cautious stance on AI overviews, he noted their potential to enhance Search revenue in the long run. He also indicated that AI is already having a positive impact on Google Cloud, with a forecast of a 27% rise in Cloud revenue from the previous year.
Similarly, J.P. Morgan analyst Doug Anmuth highlighted Google as one of the top technology picks ahead of the earnings report, expressing optimism about advancements in generative AI. However, Raymond James analyst Josh Beck cautioned that although the current outlook for Google’s AI initiatives is favorable, the long-term impact on sales remains uncertain.