Why Google's Growth Potential Surpasses Its Numerous Execution Flops

Dec. 05, 2022 3:31 PM ETAlphabet Inc. (GOOG), GOOGLAMZN, MSFT, SHOP, META15 Comments
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Summary

  • Google is fairly valued, with a price target at $133.
  • The key vertical that investors can expect from Google is successful cloud expansion.
  • Investors can expect some stagnation in search from developing technologies and competitors, and brand damage from YouTube's advertising approach.
  • New developments in AI will likely benefit Google and large peers that have proprietary data, instead of innovators like OpenAI.
  • The massive CapEx investments are the key to Google's growth in the cloud segment.

South Lake Union

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A new premise is forming based on the lack of Alphabet Inc.’s (NASDAQ:GOOG, NASDAQ:GOOGL) ("Google") ability to ship new products and the general fear cycle in tech. The implication is that Google is having

GOOGL's estimated intrinsic value and historical market cap

GOOGL's estimated intrinsic value and historical market cap (Author image with data from FMP)

Search engine comparison table

Search engine comparison (Brave website)

Charts for search interest for key media peers

Search interest for key media peers (Google Trends)

Chart for TTM revenue growth vs core inflation

TTM revenue growth vs core inflation (Author image with data from FMP)

Chart for TTM free cash flows, profitability and reinvestment

TTM free cash flows, profitability and reinvestment (Author image with data from FMP)

Chart of Google's key peer pricing vs fundamentals comparison

Google's key peer pricing vs fundamentals comparison (Author image with data from FMP)

Estimated future model for Google's fundamentals

Estimated future model for Google's fundamentals (Author image with data from FMP)

Google's intrinsic valuation table

Google's intrinsic valuation table (Image created by author)

GOOGL's payout vs its cost of equity

GOOGL's payout vs its cost of equity (Author image with data from FMP)

This article was written by

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Equity research with an emphasis on intrinsic value. We prioritize undervalued and growing companies, preferably in the early stages of their development. We have an internal wishlist - message us a ticker or write it in comment sections.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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