$GOOG Investment Thesis Bull Case vs. Valuation

AfraSimon
10-26 10:38

$Alphabet(GOOG)$

🐂 THE BULL CASE

🤖 AI: Gemini puts Google among the AI leaders, while its in-house TPUs help lower inference costs.

☁️ Cloud: Revenue has grown 195% since 2022, with a $514B backlog signaling substantial demand.

🚘 Waymo: Already operating paid robotaxi services in multiple US cities, giving Google a foothold in autonomous driving.

📺 YouTube: A dual engine of advertising and subscriptions, steadily capturing more TV viewing time.

💰 MARGIN PROFILE

• Gross margin: 61%
• EBIT margin: 33%
• Net margin: 55%
• FCF margin: 12%

📈 GROWTH SINCE 2022

• Total revenue: +58%
• EPS: +337%
• YouTube revenue: +46%
• Cloud revenue: +195%

🔮 2028 ESTIMATES

• Revenue: $753B | 23% CAGR
• EPS: $18.16 | -4% CAGR
• FCF: $6.1B | -58% CAGR

⚠️ The projected EPS and FCF declines deserve a closer look alongside the revenue growth assumptions.

🎯 VALUATION & PRICE TARGETS

Current TTM P/E: 16x
2028 forward P/E: 17x

📉 Low target: $380 | 16% upside
📊 Consensus target: $427 | 25% upside
🚀 High target: $485 | 34% upside

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