Alphabet Soup: Google is Alpha, but where are the Bets?
This valuation analysis of Google/Alphabet identifies revenue growth as the key value driver and estimates intrinsic value at $968-$970 per share, close to the then-current trading price of $1,030. The article examines Google's dominance in digital advertising (42.2% market share), its data collection advantages, and the potential upside from "bet" businesses (Waymo, Verily, Nest) while acknowledging risks from incoming data privacy regulations.
Metrics in this report
42.2%percent
Google's share of global digital advertising in 2017
20.9%percent
Facebook's share of global digital advertising in 2017
228.4billion USD
Global digital advertising spend in 2017 out of $584B total ad spending
27.87%percent
Google's 2017 operating margin, assumed stable through 5-year forecast
15%percent
Google's historical revenue growth rate over the prior 5 years (through 2017)
12%percent
forecast
Author's assumed forward 5-year revenue growth rate for Google, below historical 15%