Valuing Alphabet On A Sum Of The Parts Basis, Assuming Search Stops Growing

(12min)

Summary

  • Google Search faces potential disruption from chatbots like ChatGPT, Perplexity, and Anthropic, but its market share remains strong with only a slight decline.
  • Despite concerns, Google's diversified assets, including YouTube, Google Cloud, and Waymo, provide significant value and growth potential, mitigating risks to Search.
  • Google's valuation appears conservative, with a 5x EBITDA multiple on Search and substantial upside potential from other segments and future growth.
  • Strong buy recommendation for Google, tempered by recession risks, with a fair value estimate of $232 per share, suggesting 53% upside in 2–3 years.
a Xiaomi smartphone that displays a collection of Google applications, Indonesia, 11 May 2024.

Anzz Media

Google Search Under Assault?

It seems that headlines constantly are talking about Google Search and how at risk the business is. Adding insult to injury, Apple’s Eddy Cue at Google’s antitrust trial testified that search queries on Apple phones

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This article was written by

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Thomas Lott started as a portfolio manager at a hedge fund in 2003 and has worked as a financial professional for over 30 years. Thomas espouses Graham and Dodd/Buffett style investing, always on the lookout for high-quality equities at attractive valuations. He is a graduate of Vanderbilt University with an MBA from Northwestern's Kellogg School of Management.

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