Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate strong second-quarter earnings for Google thanks to its advancements in artificial intelligence. Google’s parent company, Alphabet, is scheduled to disclose its earnings on Tuesday.
Bank of America’s analysts, Justin Post and Nitin Bansal, have raised their revenue forecasts, attributing expected sales growth to the integration of the Gemini AI into Google Cloud and AI Overviews in Google Search. In a recent research note, they expressed confidence in the positive impact of AI integrations across Google’s ecosystem and suggested that a wider rollout of AI overviews could enhance activity in the primary Search business, despite initial setbacks that drew internet criticism for errors. They also upgraded their price target for Google stock from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, aided by its AI initiatives, which led to a surge in its stock price and pushed its market capitalization beyond the $2 trillion threshold, joining the ranks of Apple, Microsoft, and Nvidia.
The company’s impressive first-quarter results followed several AI product launches as part of its Gemini offerings. Notably, during Google I/O, it unveiled a universal AI assistant capable of interacting through smart glasses and claimed that its newest Gemini AI is 20% faster than the current version of ChatGPT.
While Wedbush’s Dan Ives was skeptical about the immediate impact of AI Overviews, he acknowledged their potential to support Search monetization over time. He also noted that AI is currently enhancing Google Cloud, predicting a 27% revenue increase from the previous year.
Doug Anmuth of J.P. Morgan shared a similarly optimistic perspective, highlighting Google as one of the top tech stocks in his firm’s portfolio alongside Uber and Amazon, citing promising developments in Generative AI ahead of Alphabet’s second-quarter results.
However, Raymond James analyst Josh Beck cautioned that while the current AI narrative surrounding Google is optimistic, the long-term impact of AI on Google’s sales remains uncertain.