Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s upcoming second-quarter earnings, attributing potential positive results to the company’s advancements in artificial intelligence. Alphabet, Google’s parent company, is scheduled to release its earnings report Tuesday after the market closes.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, noting that the integration of the Gemini AI platform into Google Cloud and AI Overviews in Google Search is expected to enhance sales. They expressed confidence in the company’s AI initiatives, suggesting that broader implementation of AI overviews will likely spur more activity within the core Search business, despite earlier challenges during the tool’s initial rollout. Consequently, they have raised their price target for Google’s stock from $200 to $206.
In April, Google announced a remarkable 60% profit surge in the first quarter, attributing part of this success to AI developments, which also boosted its stock price and increased the company’s market capitalization beyond $2 trillion, alongside Apple, Microsoft, and Nvidia.
Google’s strong performance was bolstered by recent launches of new AI products under its Gemini offerings. Among the announcements at the Google I/O developer conference was a next-generation universal AI assistant capable of interacting through smart glasses. Google asserts that its newest Gemini AI model is 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious view on the immediate impact of AI Overviews, he acknowledged that they could become beneficial for Search monetization over time. He also noted that AI is already positively impacting Google Cloud, predicting a 27% revenue increase in that segment compared to last year.
J.P. Morgan’s Doug Anmuth shared an optimistic perspective, naming Google as one of their top tech stock picks, alongside Uber and Amazon, as they look forward to the outcomes of advancements in Generative AI ahead of Alphabet’s earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current AI narrative surrounding Google appears favorable, it remains uncertain whether AI will significantly boost Google’s sales in the long term.