Analysts from Wedbush, J.P. Morgan, and Bank of America have expressed optimism about Google’s upcoming second-quarter earnings, anticipating a positive impact from the company’s advancements in artificial intelligence. Alphabet, Google’s parent company, is scheduled to announce its earnings on Tuesday.
Following the recent developments in AI, Bank of America analysts Justin Post and Nitin Bansal have revised their revenue projections for Google. They highlighted the integration of Gemini into Google Cloud and the introduction of AI Overviews in Google Search as significant factors for anticipated sales growth. Despite earlier challenges with the AI Overviews, which mistakenly generated inaccuracies and became the subject of online humor, the analysts remain optimistic. They have adjusted their price target for Google shares from $200 to $206.
Earlier this year, Google reported a remarkable 60% profit increase in the first quarter, attributing much of its success to AI advancements. This impressive performance bolstered the company’s stock value, enabling its market capitalization to exceed $2 trillion, joining industry giants like Apple, Microsoft, and Nvidia.
The company’s positive first-quarter results followed a series of new AI product launches under the Gemini brand. At the Google I/O developer conference, Google unveiled a futuristic AI assistant capable of interacting through smart glasses. According to Google, the new Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed moderate caution regarding the potential of AI Overviews for significantly enhancing Search monetization, he acknowledged that AI is already having a positive influence on Google Cloud. Like many analysts, he predicts a 27% rise in Cloud revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth shared a similar upbeat outlook, identifying Google as one of the firm’s top tech stock picks alongside Uber and Amazon, citing positive developments in generative AI ahead of Alphabet’s earnings announcement.
However, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding Google’s AI is favorable, the long-term impact of AI on sales remains uncertain.