Analysts from Wedbush, J.P. Morgan, and Bank of America foresee a promising earnings report for Alphabet, Google’s parent company, as it prepares to announce its second-quarter results on Tuesday. These analysts have elevated their revenue forecasts for Google, citing the impact of AI advancements such as the integration of Gemini into Google Cloud and the implementation of AI Overviews in Google Search.
Bank of America analysts Justin Post and Nitin Bansal expressed optimism about the growing role of AI within Google’s ecosystem, believing that the expanded use of AI overviews will enhance user activity on Search, despite some earlier issues with the tool. They have adjusted their price target for Google stock from $200 to $206.
In April, Google reported a staggering 60% increase in profits for the first quarter, largely driven by AI developments, which propelled its stock price and increased its market capitalization to over $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
This impressive first-quarter performance followed a series of AI product launches, including a new universal AI assistant unveiled at the Google I/O developer conference, designed to interact with users through smart glasses. Google claims its latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s analyst Dan Ives expressed cautious optimism regarding the potential of AI Overviews to enhance revenue in Search over time, he noted that AI is already proving beneficial for Google Cloud. Like other analysts, he anticipates a 27% rise in Cloud revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth also shared a positive outlook, recently identifying Google as one of the firm’s top technology stocks, alongside Uber and Amazon, and he expressed enthusiasm about the advancements in generative AI ahead of Alphabet’s earnings announcement.
However, Raymond James analyst Josh Beck cautioned that although the current sentiment surrounding Google’s AI initiatives is favorable, the lasting impact on sales remains uncertain.