Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in artificial intelligence will significantly impact its earnings for the second quarter. Google’s parent company, Alphabet, is scheduled to release its earnings report on Tuesday.
Nvidia is currently experiencing one of the most challenging weeks for its stock. Analysts from Bank of America have adjusted their revenue expectations upward for Google, noting that the integration of the Gemini AI into Google Cloud and AI Overviews within Google Search is likely to enhance sales.
In a recent report, analysts Justin Post and Nitin Bansal from Bank of America expressed optimism about the expanding role of AI in Google’s ecosystem, suggesting that a wider implementation of AI Overviews could increase activity in the core Search business. Despite a rocky start with some missteps during the rollout of AI Overviews, which drew online ridicule for inaccuracies, they raised their price target for Google shares from $200 to $206.
Earlier in April, Google posted a remarkable 60% profit increase in the first quarter, largely attributed to its AI developments. This surge in earnings propelled its stock price, pushing the company’s market value above $2 trillion, a milestone shared with tech giants like Apple, Microsoft, and Nvidia.
The strong performance in the first quarter followed a series of new AI product launches under the Gemini AI umbrella. At the recent Google I/O developer conference, the company unveiled an advanced universal AI assistant capable of vision and conversation through smart glasses, claiming that its latest Gemini AI is 20% more efficient than the latest ChatGPT.
While Wedbush’s Dan Ives expressed some reservations about the potential of AI Overviews, he noted that they could eventually benefit Search monetization. He also highlighted that AI is already making a significant positive impact on Google Cloud, with an anticipated 27% growth in Cloud revenue year-over-year.
J.P. Morgan’s Doug Anmuth also shared a positive outlook, identifying Google as a top tech stock along with Uber and Amazon, expressing encouragement over the advancements in generative AI in light of Alphabet’s upcoming earnings report. However, Raymond James analyst Josh Beck cautioned that, while the current AI narrative surrounding Google is optimistic, the long-term impact of AI on the company’s sales remains uncertain.