Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s upcoming earnings report for the second quarter will reflect the positive impact of the company’s advances in artificial intelligence. Alphabet, Google’s parent company, is scheduled to announce its earnings on Tuesday.
Recent studies indicate that the pill version of Novo Nordisk’s Ozempic drug can significantly reduce the risk of heart attacks and strokes.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue forecasts for Google, attributing the expected sales increase to the integration of the Gemini AI technology into Google Cloud and AI Overviews in Google Search. In their research note, they expressed optimism about the expanding use of AI across Google’s operations, suggesting that enhanced AI overviews should lead to increased activity in Google’s core Search service. This optimism persists even after early challenges with the AI overviews, which attracted ridicule for their inaccuracies. The analysts raised Google’s stock price target from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, largely due to its AI developments. Following this news, the company’s stock value surged, elevating its market capitalization beyond $2 trillion, positioning it alongside tech giants like Apple, Microsoft, and Nvidia.
The positive financial results came after a series of AI product launches under the Gemini brand. At the Google I/O developer conference, the company unveiled a new universal AI assistant capable of interacting through smart glasses. According to Google, the latest version of Gemini AI operates 20% faster than the most recent iteration of ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious view regarding AI Overviews compared to Post and Bansal, he acknowledged that it could provide future benefits for Search monetization. He also noted that AI is currently enhancing Google Cloud, anticipating a 27% increase in revenue from this sector compared to the previous year.
J.P. Morgan analyst Doug Anmuth expressed similar optimism, listing Google among his firm’s top technology stock picks, alongside Uber and Amazon. He highlighted his team’s positive outlook on the progress of generative AI ahead of Alphabet’s earnings announcement.
However, Raymond James analyst Josh Beck cautioned that although the current perspective on Google’s AI initiatives is favorable, the long-term impact on sales remains uncertain.