Jun. 30 at 4:15 PM
Looking at
$GOOG from a 'sum of the parts' perspective makes you realize just how low of a multiple the search portion of the business trades at.
A recent Barron’s article estimated
$GOOG is worth
$260/share using a sum-of-the-parts model.
Let’s break it down:
- YouTube → Valued at 22x earnings
- Google Cloud → 16x (in line with peers)
- Waymo → ~
$300B (controversial, but growing with hige potential)
Altogether: ~
$1.4T
But
$GOOG has a total market cap of ~
$2.1T.
That means Google Search is being valued at ~
$724B.
Which leads us to this:
Google Search is estimated to earn ~
$50B/year.
That means it's currently trading at just ~14.5x earnings.
And during it Apri, that multiple was as low as 11.x earnings.
Compare that to:
$PEP → ~16.3x multiple, with 2–3% growth
$KO → ~24.2x multiple, with 5–6% growth
Businesses with low single digit growth, trading at much higher multiples than
$GOOG.
(Obviously not an apples to apples comparison, but does a company growing earnings at 2%-3% deserve a higher multiple than the search portion of
$GOOG?)
Google Search grew 10%+ YoY.
And
$GOOG isn’t falling behind in AI:
Gemini 2.5 Pro LLM ranks #1 in:
- Best in Reasoning
- Adaptive Reasoning
- Overall performance
The average analyst estimate for EPS growth through 2029 is 14.36% EPS growth.
Assuming 14.36% EPS growth, and a 21 PE multiple (below historic average):
→
$393/share by 2030
→ +122% total return or 14.26% CAGR
This is why
$GOOG was one of the most frequently bought stocks by super investors last quarter, behind just a few of these stocks: https://dividendology.com/p/super-investors-bought-these-dividend-5cd?r=23xcsz
