Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate a positive impact on Google’s second-quarter earnings, set to be announced after the closing bell on Tuesday. They have raised their revenue forecasts for the tech giant, with Bank of America’s Justin Post and Nitin Bansal highlighting the integration of Gemini into Google Cloud and the implementation of AI features in Google Search as key factors driving sales growth.
In a recent research note, Post and Bansal expressed optimism about the expanding AI capabilities within Google’s ecosystem, indicating that a wider rollout of AI overviews could enhance user engagement in the core Search business. They adjusted their price target for Google stock from $200 to $206, despite some initial challenges faced by the AI overview tool, which was humorously criticized online for inaccuracies.
In April, Google reported a remarkable 60% increase in profits for the first quarter, attributed in part to AI advancements, which propelled its stock price and market capitalization past the $2 trillion threshold, joining the ranks of Apple, Microsoft, and Nvidia.
This success followed a series of new artificial intelligence product launches, including Gemini AI offerings presented at Google I/O. Among these was a future AI assistant capable of interacting through smart glasses, with Google asserting that its latest Gemini AI is 20% faster than the newest iteration of ChatGPT.
Although Wedbush’s Dan Ives expressed some caution regarding AI Overviews, he noted that it could progressively support Search monetization. He also stated that AI is already benefiting Google Cloud, predicting a 27% year-over-year growth in Cloud revenue.
Doug Anmuth of J.P. Morgan also voiced positive sentiments, ranking Google among his top tech stocks alongside Uber and Amazon, and indicating encouragement from advancements in General AI ahead of the earnings report.
However, Raymond James analyst Josh Beck cautioned that while current AI developments appear favorable, it remains uncertain whether these initiatives will lead to sustained long-term sales growth for Google.