Google is expected to shine in its second-quarter earnings report, according to analysts from Wedbush, J.P. Morgan, and Bank of America. The parent company Alphabet is set to announce its earnings on Tuesday after the stock market closes.
Analysts from Bank of America, Justin Post and Nitin Bansal, have increased their revenue forecasts for Google, highlighting the positive impact of integrating the Gemini AI technology into Google Cloud and enhancing AI functionalities in Google Search. They noted in a recent research note that the broader implementation of AI Overviews is likely to drive increased engagement in the core Search business, despite some initial setbacks during the rollout of AI Overviews which garnered some online criticism due to errors. They also raised their price target for Google’s stock from $200 to $206.
In April, Google reported an impressive 60% profit surge in the first quarter, largely attributed to its advancements in AI, which led to a significant increase in its stock price and pushed its market capitalization above $2 trillion, joining tech giants like Apple, Microsoft, and Nvidia.
Google’s strong performance in the first quarter followed a series of new AI product launches under its Gemini AI initiative. The most recent announcements at the Google I/O developer conference included a futuristic universal AI assistant designed to interact through smart glasses, claiming to be 20% faster than the latest version of ChatGPT.
While Wedbush analyst Dan Ives expressed a more cautious outlook on AI Overviews, suggesting they might assist in Search monetization over time, he acknowledged that AI is already enhancing Google Cloud’s performance. He, along with other analysts, predicts a 27% increase in Cloud revenue compared to the previous year.
Echoing this positive perspective, J.P. Morgan’s Doug Anmuth identified Google as one of the firm’s top tech stock picks alongside Uber and Amazon, stating that his team is optimistic about the progress in generative AI ahead of Alphabet’s earnings announcement.
However, Raymond James analyst Josh Beck cautioned that although the current AI developments for Google are encouraging, the long-term impact on sales will need further evaluation.