Analysts from Wedbush, J.P. Morgan, and Bank of America predict a strong second-quarter earnings report for Google, with parent company Alphabet set to announce its earnings on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue projections for Google, highlighting the positive impact of AI integrations, including the Gemini tool in Google Cloud and AI Overviews in Google Search. They noted in a recent research note that these developments are likely to enhance sales, despite some initial challenges during the rollout of AI Overviews, which faced criticism for generating errors. As a result, they raised their price target for Google stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, largely attributed to its AI advancements, which propelled its stock price and market capitalization to over $2 trillion, placing it alongside Apple, Microsoft, and Nvidia.
The company’s strong first-quarter results followed the introduction of various AI products as part of its Gemini AI series. At the recent Google I/O developer conference, Google showcased ambitious AI projects, including a visionary AI assistant intended to interact through smart glasses. Google claims that its latest Gemini AI is 20% faster than the current version of ChatGPT.
While Wedbush’s Dan Ives expressed a more cautious view on the long-term benefits of AI Overviews, he noted that they might lend support to Search monetization over time. He also emphasized that AI is already having a positive influence on Google Cloud, where analysts expect a 27% year-over-year revenue increase.
J.P. Morgan’s Doug Anmuth mirrored the optimism, naming Google among its top tech stock picks, alongside Uber and Amazon. He mentioned being encouraged by the progress made in generative AI ahead of Alphabet’s second-quarter earnings report.
However, Raymond James analyst Josh Beck cautioned that, although the current narrative surrounding Google’s AI is favorable, the long-term impact of AI on Google’s sales remains uncertain.