Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google will report strong second-quarter earnings, due in part to the company’s 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 raised their revenue forecasts for Google, attributing this to the integration of Gemini into Google Cloud and the introduction of AI Overviews in Google Search, which they believe will enhance sales. They expressed optimism about the growing AI applications within Google’s ecosystem and anticipate that the expanded use of AI Overviews will increase activity in the core Search business. Despite initial complications, including some humorous flaws in the AI Overviews, they revised their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% rise in profits for the first quarter, significantly influenced by its AI initiatives, leading to a surge in its stock price and a market capitalization exceeding $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The company’s successful first-quarter results followed months of new AI product launches linked to its Gemini offerings. Notably, the most recent announcements at the Google I/O developer conference included an innovative AI assistant for smart glasses, which Google claims is 20% faster than the latest ChatGPT.
While Wedbush analyst Dan Ives is somewhat cautious about the potential of AI Overviews, he acknowledged that it could eventually foster revenue growth for Google Search. He noted that AI is already enhancing Google Cloud’s performance, with expectations of a 27% increase in Cloud revenue year-over-year.
J.P. Morgan’s Doug Anmuth shared a positive outlook, labeling Google as one of the top tech stocks alongside Uber and Amazon, citing encouragement regarding progress in generative AI ahead of Alphabet’s earnings announcement. Conversely, Raymond James analyst Josh Beck cautioned that the long-term impact of AI on Google’s sales remains uncertain, despite the current favorable narrative.