Analysts from Wedbush, J.P. Morgan, and Bank of America predict that Google’s advancements in AI will enhance its second-quarter earnings, with Alphabet set to release its results after the market closes on Tuesday.
Bank of America analysts Justin Post and Nitin Bansal have increased their revenue forecasts for Google, citing the successful integration of Gemini into Google Cloud and AI Features in Google Search as key factors in boosting sales. They expressed optimism about the growing presence of AI across Google’s services, believing that the wider implementation of AI features will likely increase engagement in the core Search segment. Following their analysis, they adjusted their price target for Google’s stock from $200 to $206.
Last April, Google reported a remarkable 60% rise in profits for the first quarter, which was largely attributed to AI advancements. This performance propelled the company’s stock price, elevating its market capitalization above $2 trillion, placing it alongside tech giants like Apple, Microsoft, and Nvidia.
Google’s positive financial results followed a series of new AI product launches within its Gemini AI initiative. Noteworthy announcements at the Google I/O developer conference included plans for a next-generation AI assistant capable of interacting through smart glasses. Google claims that its latest Gemini AI is 20% faster than the current version of ChatGPT.
While Wedbush analyst Dan Ives expressed some reservations about the AI Features, he acknowledged that it could serve as a long-term benefit for Search monetization. Ives also noted that AI is already contributing to growth in Google Cloud, predicting a 27% increase in Cloud revenue compared to the previous year.
J.P. Morgan’s Doug Anmuth shared a similar optimistic outlook, naming Google one of his top technology picks alongside Uber and Amazon, and expressing enthusiasm about the progress in generative AI leading up to Alphabet’s earnings report.
However, Raymond James analyst Josh Beck cautioned that while the short-term AI narrative for Google appears positive, it remains uncertain if AI will significantly impact Google’s long-term sales growth.