Analysts from Wedbush, J.P. Morgan, and Bank of America believe that Google’s advancements in artificial intelligence are set to enhance its earnings for the second quarter. Alphabet, Google’s parent company, is scheduled to release its earnings report on Tuesday afternoon.
Bank of America and Wedbush analysts have raised their revenue forecasts for Google. Justin Post and Nitin Bansal from Bank of America anticipate that the integration of the Gemini AI into Google Cloud and AI Overviews in Google Search will significantly increase sales. They expressed optimism about the expanding AI applications within Google’s ecosystem and expect the broader use of AI Overviews to drive more engagement in the core Search business. Despite some initial challenges with AI Overviews, which drew humorous criticism for inaccuracies, the duo has adjusted their price target for Google’s stock from $200 to $206.
In April, Google reported a remarkable 60% profit increase in the first quarter, largely attributed to its AI developments. This impressive performance led to a surge in its stock price, pushing the company’s market capitalization above $2 trillion, joining the ranks of Apple, Microsoft, and Nvidia.
The solid first-quarter results came after months of launching new AI products as part of its Gemini AI initiative. At the recent Google I/O developer conference, Google introduced its vision for a universal AI assistant capable of operating through smart glasses, claiming that its latest Gemini AI is 20% faster than the latest version of ChatGPT.
While Wedbush’s Dan Ives expressed a slightly more cautious view on AI Overviews, suggesting they may eventually support Search monetization, he noted that AI is already having a positive impact on Google Cloud. He, alongside other analysts, expects Google to report a 27% increase in Cloud revenue year-over-year.
J.P. Morgan’s Doug Anmuth also aligned with this optimistic outlook, naming Google as one of the top tech stocks along with Uber and Amazon, expressing enthusiasm for the advancements in generative AI ahead of Alphabet’s earnings announcement.
However, Raymond James analyst Josh Beck cautioned that even though the current AI narrative surrounding Google is encouraging, the long-term impact of AI on Google’s sales remains uncertain.