Analysts from Wedbush, J.P. Morgan, and Bank of America are optimistic about Google’s upcoming second-quarter earnings, attributing much of the expected positive results to advancements in the company’s artificial intelligence initiatives. Alphabet, Google’s parent company, is scheduled to announce its earnings after market close on Tuesday.
Both Bank of America and Wedbush adjusted their revenue forecasts for Google, highlighting the potential impact of the integration of the Gemini AI into Google Cloud and the AI Overviews feature in Google Search. Bank of America analysts Justin Post and Nitin Bansal expressed confidence that these enhancements would promote increased sales and engagement in Google’s core Search business, despite some early challenges faced by the AI Overviews feature, which encountered criticism online due to mistakes and inaccuracies. They also revised 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 driven by its AI developments, which resulted in a significant spike in its stock price and pushed its market capitalization beyond the $2 trillion threshold, joining the ranks of other tech giants like Apple, Microsoft, and Nvidia.
The strong performance in the first quarter followed a series of new AI product launches as part of Google’s Gemini AI program. At the Google I/O developer conference, the company revealed an innovative AI assistant designed to interact seamlessly through smart glasses. Google asserted that its latest Gemini AI is 20% faster than the newest version of ChatGPT.
While Wedbush’s Dan Ives expressed some caution regarding the AI Overviews feature, he acknowledged its potential to enhance Search monetization in the long run. He also noted that AI is already positively impacting Google Cloud, anticipating a 27% increase in Cloud revenue year-over-year, a sentiment echoed by other analysts on Wall Street.
J.P. Morgan analyst Doug Anmuth also shared a positive outlook, naming Google among the firm’s top tech stock picks alongside Uber and Amazon, citing strong progress in generative AI ahead of the upcoming earnings report. Meanwhile, Raymond James analyst Josh Beck cautioned that although the current AI narrative for Google appears favorable, the long-term effects of AI on the company’s sales remain uncertain.