Analysts from Wedbush, J.P. Morgan, and Bank of America have optimistic projections for Google’s upcoming second-quarter earnings, due to be announced after market close on Tuesday. They believe that the integration of AI features into Google services will positively impact the company’s financial performance.
Bank of America analysts, Justin Post and Nitin Bansal, raised their revenue forecasts for Google, citing the successful incorporation of the Gemini AI system into Google Cloud and AI Overviews in Google Search as key contributors to increasing sales. They expressed confidence that the broader implementation of AI features will enhance activity within the core Search business, despite some initial challenges faced during the rollout of AI Overviews, which encountered criticism for inaccuracies. As a result, they adjusted their price target for Google’s stock upward from $200 to $206.
In its earlier report for the first quarter, Google demonstrated a remarkable 60% profit growth, largely attributed to AI innovations. This impressive performance caused a significant rise in its stock price, elevating the company’s market valuation to over $2 trillion, joining the ranks of tech giants like Apple, Microsoft, and Nvidia.
Following a succession of new AI product launches, Google introduced its next-generation AI capabilities at its recent developer conference, including a universal AI assistant capable of interacting through smart glasses. Google claims its latest Gemini AI is 20% quicker than the current version of ChatGPT.
While Wedbush’s Dan Ives was somewhat cautious about the potential of AI Overviews, he acknowledged that they could eventually bolster Search monetization. He also noted that AI is having an immediate positive impact on Google Cloud, anticipating a 27% rise in Cloud revenue compared to the previous year.
J.P. Morgan analyst Doug Anmuth shared a similar positive outlook on Google, ranking it among the firm’s top technology stock picks, alongside Uber and Amazon. He expressed encouragement over advancements in generative AI as Alphabet prepares to unveil its second-quarter earnings.
However, Raymond James analyst Josh Beck cautioned that while the current enthusiasm surrounding AI is favorable, it remains uncertain whether these developments will result in sustained long-term sales growth for Google.