Google’s AI advancements are expected to boost its second-quarter earnings, according to analysts from Wedbush, J.P. Morgan, and Bank of America. Alphabet, Google’s parent company, is set to report earnings after the bell on Tuesday.
Analysts from Bank of America and Wedbush have raised their revenue forecasts for Google. Bank of America’s analysts, Justin Post and Nitin Bansal, attribute the optimistic outlook to the integration of Gemini into Google Cloud and AI Overviews in Google Search.
In a recent research note, Post and Bansal expressed positive sentiments about the growing AI integrations across Google’s platforms, suggesting that a broader rollout of AI overviews will drive higher activity in the core Search business. They raised their price outlook for Google’s stock from $200 to $206. Despite some initial issues with AI overviews, which led to online ridicule due to inaccuracies, the analysts remain confident in its potential.
In April, Google reported a first-quarter profit surge of 60%, partially driven by AI advancements, which led to a significant increase in its stock price and boosted the company’s market capitalization past $2 trillion. This placed Google alongside other tech giants like Apple, Microsoft, and Nvidia.
Google’s strong first-quarter performance followed the release of various new AI products under its Gemini portfolio. Notable announcements during the Google I/O developer conference included an advanced universal AI assistant designed to interact through smart glasses. Google claims that its latest Gemini AI is 20% faster than the newest version of ChatGPT.
Though Wedbush analyst Dan Ives is somewhat less optimistic about AI Overviews, he anticipates that it could eventually enhance Search monetization. Ives also noted that AI is already benefiting Google Cloud, projecting a 27% increase in Cloud revenue from the previous year.
J.P. Morgan analyst Doug Anmuth also expressed a positive outlook, placing Google among the firm’s top tech stock picks along with Uber and Amazon. Anmuth cited encouraging progress in generative AI ahead of Google’s second-quarter earnings report.
However, Raymond James analyst Josh Beck cautioned that while the current AI-driven narrative is favorable for Google, the long-term impact of AI on the company’s sales remains uncertain.