Google’s AI moves are about to give it a second-quarter earnings glow, according to Wedbush, J.P.Morgan, and Bank of America analysts. Google parent Alphabet is set to report earnings after the bell Tuesday.
Bank of America and Wedbush analysts raised their revenue outlooks for Google. Bank of America’s Justin Post and Nitin Bansal see the company’s integration of Gemini into Google Cloud and AI Overviews in Google Search boosting sales.
“We remain positive on growing AI integrations across Google’s ecosystem and think a broader rollout of AI overviews will help drive higher activity in the core Search business,” they said in a research note at the end of last week. That’s despite some hiccups in the initial rollout of AI overviews, when the tool became the butt of internet jokes for producing flubs and fabrications. Post and Bansal raised their price outlook for Google’s stock from $200 to $206.
Google in April reported a surge in profits of 60% in the first quarter, partly thanks to AI. In response, its stock price soared, pushing the company’s market capitalization past the $2 trillion mark to join Apple, Microsoft, and Nvidia.
Google’s sunny first-quarter performance followed months of releases of new artificial intelligence products as part of its Gemini AI offerings. Its latest releases at its big developer conference, Google I/O, included a universal AI assistant of the future that would be able to see and talk through a user’s smart glasses. Google claims its latest Gemini AI is 20% faster than the newest ChatGPT.
Wedbush’s Dan Ives was less bullish on AI Overviews than Post and Bansil, but said in a research note Monday that it “may become a tailwind for Search monetization over time.” Meanwhile, Ives said AI is already boosting Google Cloud. He thinks, like other analysts on Wall Street, that Google will report a 27% increase in Cloud revenue from last year.
J.P.Morgan’s Doug Anmuth echoed the positive sentiment and named Google one of the investment firm’s top tech stocks (along with Uber and Amazon) last week, saying his team is “encouraged by GenAI progress” ahead of Alphabet’s second-quarter earnings report.
Raymond James analyst Josh Beck warned that while the current AI narrative for Google is positive, whether or not AI will drive Google sales up long-term is still to be determined.