Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s second-quarter earnings, suggesting that the company’s advancements in artificial intelligence will contribute positively to its financial performance. Alphabet, Google’s parent company, is scheduled to announce its earnings on Tuesday after the market closes.
Both Bank of America analysts Justin Post and Nitin Bansal have revised their revenue forecasts upward for Google, citing the integration of Gemini into Google Cloud and AI Overviews in Google Search as key drivers for increased sales. They expressed confidence in the potential of AI integrations to enhance user engagement in Google’s core Search business, despite some initial issues during the rollout of AI Overviews that attracted online criticism due to inaccuracies. Following these assessments, they adjusted their price target for Google’s stock from $200 to $206.
In its first-quarter earnings report in April, Google saw a remarkable profit increase of 60%, significantly aided by its AI initiatives, which elevated its market capitalization beyond $2 trillion, placing it alongside tech giants Apple, Microsoft, and Nvidia.
Google’s strong performance was fueled by a series of new artificial intelligence products launched over the preceding months. At its recent developer conference, Google I/O, the company introduced an innovative universal AI assistant projected to operate through smart glasses. Google claims that its latest Gemini AI model is 20% faster than the most recent version of ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious stance on AI Overviews, indicating that they could support Search monetization in the long run, he noted the existing positive impact of AI on Google Cloud. Ives, along with other analysts, anticipates a 27% rise in Cloud revenue compared to last year.
J.P. Morgan’s Doug Anmuth shared a favorable outlook, identifying Google as one of the top technology stocks alongside Uber and Amazon, and expressed enthusiasm about the progress in generative AI as the company approaches its second-quarter earnings report. Conversely, Raymond James analyst Josh Beck cautioned that the long-term implications of AI on Google’s sales remain uncertain, despite the current positive narrative.