Analysts from Wedbush, J.P. Morgan, and Bank of America anticipate that Google’s advancements in artificial intelligence will positively impact its second-quarter earnings. Alphabet, Google’s parent company, is expected to release its earnings report on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have upgraded their revenue projections for Google, citing the integration of Gemini into Google Cloud and the implementation of AI features in Google Search as key drivers for increased sales. They expressed optimism in a recent research note, asserting that the broader rollout of AI functionality should enhance engagement in Google’s core Search business, despite some initial challenges with AI overviews that attracted internet ridicule for inaccuracies. They raised their price target for Google’s stock from $200 to $206.
In its first-quarter report for April, Google reported a remarkable 60% increase in profits, partially attributed to AI’s contributions. This positive performance saw the company’s stock soar and its market capitalization surpass $2 trillion, placing it alongside other tech giants like Apple, Microsoft, and Nvidia.
Google’s impressive results come after a series of AI product launches under its Gemini AI brand. Features showcased at the recent Google I/O developer conference included an advanced universal AI assistant capable of interacting through smart glasses. Google claims that its recent Gemini AI offerings are 20% quicker than the latest version of ChatGPT.
While Dan Ives of Wedbush was somewhat cautious about the potential of AI Overviews compared to his colleagues, he noted it could eventually support Search monetization. He also indicated that AI is already benefiting Google Cloud. Many analysts, including Ives, predict a 27% year-over-year increase in Cloud revenue for Google.
Doug Anmuth from J.P. Morgan shared a positive outlook as well, identifying Google as one of the firm’s leading tech stock picks, alongside Uber and Amazon, and highlighting optimism surrounding the company’s Generative AI advancements in anticipation of the upcoming earnings report.
However, Raymond James analyst Josh Beck cautioned that although the current narrative around AI at Google is favorable, the long-term impact on sales remains uncertain.