Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s upcoming second-quarter earnings, anticipating that the company’s advancements in artificial intelligence will positively influence its financial results. Google’s parent company, Alphabet, is scheduled to release its earnings report on Tuesday.
Bank of America analysts, including Justin Post and Nitin Bansal, have revised their revenue projections for Google upwards. They believe that the incorporation of the Gemini AI system into Google Cloud and the AI Overviews feature in Google Search will enhance sales. They highlighted in a research note that they are confident in the continued growth of AI applications within Google’s ecosystem, as they expect a wider implementation of AI overviews to increase activity in the core Search segment. Despite some early struggles with the AI Overviews tool, which faced criticism for inaccuracies, they raised their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase for the first quarter, largely attributed to its AI initiatives, which elevated its stock price and market capitalization above $2 trillion, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
The positive first-quarter results followed numerous launches of new AI products, particularly in the Gemini AI lineup. Among these was the introduction of a universal AI assistant at the recent Google I/O developer conference, intended to interface with users via smart glasses. Google claims its latest Gemini AI model is significantly faster than the latest version of ChatGPT.
Although Wedbush analyst Dan Ives expressed some reservations about the immediate impact of AI Overviews, he noted it could eventually benefit Search monetization. He also affirmed that AI has already started enhancing Google Cloud’s performance, joining other analysts in projecting a 27% increase in Cloud revenue year-over-year.
Doug Anmuth from J.P. Morgan mirrored this optimistic outlook, identifying Google as one of the firm’s top technology stock picks, alongside Uber and Amazon, while expressing enthusiasm for the company’s GenAI developments ahead of the earnings report.
However, analyst Josh Beck from Raymond James cautioned that, while the current narrative surrounding AI for Google is favorable, the long-term effects of AI on the company’s sales remain uncertain.