Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google will see a boost in its second-quarter earnings thanks to its advancements in artificial intelligence. Alphabet, Google’s parent company, is scheduled to announce its earnings on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, crediting the integration of the Gemini AI into Google Cloud and AI Overviews in Google Search for the projected sales growth. They expressed optimism about the ongoing AI integrations, predicting that the wider implementation of AI Overviews will enhance activity in the core Search business. Despite earlier challenges during the rollout of AI Overviews, which led to some internet ridicule due to inaccuracies, they raised their price forecast for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% profit surge in the first quarter, driven in part by its AI initiatives, which caused its stock to rise and its market capitalization to exceed $2 trillion, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
The upbeat first-quarter results followed a series of new AI product launches under the Gemini AI brand. At the recent Google I/O developer conference, the company unveiled plans for a next-generation AI assistant capable of interacting through smart glasses, claiming that its latest Gemini AI is 20% faster than ChatGPT.
While Wedbush’s Dan Ives expressed some caution regarding the impact of AI Overviews, he noted that they could eventually support Search monetization. He also highlighted that AI is already making a positive difference for Google Cloud, forecasting a 27% increase in Cloud revenue year-over-year.
J.P. Morgan’s Doug Anmuth shared the positive outlook, naming Google among the firm’s top tech stock picks, alongside Uber and Amazon. He stated that his team is “encouraged by GenAI progress” as they anticipate Alphabet’s upcoming earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current narrative around AI for Google is promising, the long-term effect of AI on sales remains uncertain.