Analysts from Wedbush, J.P. Morgan, and Bank of America believe that Google’s advancements in artificial intelligence (AI) will positively influence its upcoming second-quarter earnings report, which is scheduled to be released after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue projections for Google, highlighting the impact of the recent integration of the Gemini AI platform into Google Cloud and the AI Overviews feature in Google Search, which they expect to enhance sales. Their research notes suggest that these AI integrations are likely to increase engagement within Google’s core Search business, despite some initial challenges with the rollout of AI Overviews that had previously been the subject of internet criticism for inaccuracies. They have raised their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% increase in profits for the first quarter, largely attributed to its AI initiatives, which helped elevate its stock price and push its market capitalization above $2 trillion, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
The company’s robust performance in the first quarter followed a series of AI product releases as part of its Gemini AI offerings. Notable announcements at the Google I/O developer conference included a futuristic universal AI assistant capable of interacting through smart glasses. Google claims its latest Gemini AI is 20% more efficient than the most recent version of ChatGPT.
While Wedbush’s Dan Ives expressed less enthusiasm about AI Overviews compared to Post and Bansal, he acknowledged its potential to enhance Search monetization over time. He also noted that AI is already contributing positively to Google Cloud, predicting a 27% year-over-year increase in Cloud revenue.
J.P. Morgan analyst Doug Anmuth mirrored this optimistic outlook by listing Google among the firm’s top technology stock picks, alongside Uber and Amazon, citing promising advancements in generative AI ahead of the earnings report.
Nonetheless, Raymond James analyst Josh Beck cautioned that while the current narrative surrounding Google’s AI developments appears favorable, the long-term impact of AI on the company’s sales performance remains uncertain.