Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s upcoming second-quarter earnings, attributing potential growth to the company’s advancements in artificial intelligence. Alphabet, Google’s parent company, is scheduled to announce its earnings on Tuesday.
According to Bank of America analysts Justin Post and Nitin Bansal, the incorporation of Gemini into Google Cloud and AI Overviews into Google Search is expected to enhance sales. They express confidence in the growing integration of AI across Google’s platform, predicting that this will increase activity in the core Search business, despite early challenges with the AI Overviews tool. They have raised their stock price target for Google from $200 to $206.
In its first quarter, Google reported a remarkable 60% rise in profits, fueled by AI initiatives, leading to a surge in its stock price and a market capitalization exceeding $2 trillion, placing it alongside major firms like Apple, Microsoft, and Nvidia.
The positive earnings report followed a series of new AI product launches from Google, including a universal AI assistant introduced during its developer conference, Google I/O. Google asserts that its latest Gemini AI is significantly faster than the latest ChatGPT version.
While Wedbush’s Dan Ives holds a more cautious view on the AI Overviews, he believes it could eventually support Search monetization. He also noted that AI is positively impacting Google Cloud, forecasting a 27% increase in Cloud revenue year-over-year.
Similarly, Doug Anmuth from J.P. Morgan referred to Google as one of their top tech stock recommendations, alongside Uber and Amazon, citing encouraging developments in generative AI ahead of the earnings report. However, Raymond James analyst Josh Beck cautioned that it remains to be seen whether AI will drive long-term sales growth for Google.