Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s artificial intelligence initiatives will positively impact its second-quarter earnings. Alphabet, Google’s parent company, is expected to announce its earnings on Tuesday after the market closes.
They have increased their revenue expectations for Google due to the integration of its Gemini AI into Google Cloud and the introduction of AI Overviews in Google Search. Bank of America analysts Justin Post and Nitin Bansal have expressed optimism regarding the growing use of AI across Google’s services, believing that broader deployment of AI Overviews will enhance user engagement in the Search sector. Despite initial challenges with AI Overviews generating erroneous content that led to online ridicule, they have raised their price target for Google’s stock from $200 to $206.
In the first quarter, Google reported a remarkable 60% rise in profits, attributed in part to its AI advancements. This growth spurred a significant increase in its stock price, elevating the company’s market capitalization beyond $2 trillion, joining giants like Apple, Microsoft, and Nvidia.
Google’s robust performance in the earlier quarter followed multiple AI product launches within its Gemini AI suite. Highlights from the recent Google I/O developer conference included a vision for a universal AI assistant capable of interacting through smart glasses. Google also claims its latest Gemini AI operates 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives was more cautious about the immediate impact of AI Overviews, he suggested they could provide a boost to Search monetization over time. He also noted that AI is already benefiting Google Cloud and predicts a 27% increase in its Cloud revenue compared to last year.
Doug Anmuth from J.P. Morgan shared this positive outlook, naming Google among his firm’s top technology stocks, along with Uber and Amazon, highlighting their excitement about advancements in Generative AI ahead of the upcoming earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current sentiment surrounding AI for Google is optimistic, the long-term implications for driving sales remain uncertain.