Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s second-quarter earnings, attributing potential growth to its advancements in artificial intelligence. Google parent Alphabet is scheduled to release its earnings report this Tuesday.
According to analysts at Bank of America, Justin Post and Nitin Bansal, the integration of Gemini into Google Cloud and new AI features in Google Search are likely to enhance revenue. Despite some initial setbacks with AI overviews, which faced criticism for inaccuracies, they believe broader implementation will increase user engagement in Search. They raised their price target for Google’s stock from $200 to $206.
In April, Google experienced a remarkable 60% profit surge in the first quarter, largely driven by its AI initiatives, resulting in a rise in its market capitalization past $2 trillion, joining tech giants like Apple, Microsoft, and Nvidia.
This positive first-quarter outcome followed the launch of various artificial intelligence products under its Gemini brand. Highlights from Google’s recent developer conference included an advanced universal AI assistant designed to operate through smart glasses, with claims that the latest Gemini AI is 20% faster than the newest version of ChatGPT.
While Wedbush’s Dan Ives expressed some caution regarding AI overviews, he noted that they could eventually contribute positively to Search monetization. He emphasized that AI is already having a favorable impact on Google Cloud, forecasting a 27% revenue increase in that sector year-over-year.
J.P. Morgan’s Doug Anmuth also shared a positive outlook, naming Google as one of the firm’s top tech stocks alongside Uber and Amazon, citing promising developments in generative AI ahead of Alphabet’s second-quarter earnings.
Conversely, Raymond James analyst Josh Beck cautioned that, although the current environment for Google in terms of AI looks promising, it remains uncertain whether these advancements will lead to sustained sales growth in the long run.