Google is going to report earnings this week - and I thought I would run through a simple valuation exercise.

Revenue Estimate : $72.75B (+4.39%) ($69.69B)
TTM Revenue : $287B (+0.5%) ($286B)

So the comps are pretty steep now, as we are still comparing to the period where Google was growing much faster (as an example TTM Revenue from this period last year was up 11% YoY).

In terms of valuation; historically PS for TTM has ranged from a high of 8 to a low of 4.5; and we are definately in the low range now - which makes sense as revenue growth is has slowed.

So the base case would be for Google to continue its slow revenue growth - probably hitting $300B towards the end of 2024 (calendar). If we put a 5x multiplier on that we get a market cap of $1.5T - basically flat for the next 6 quarters. However the up-side case would be for revenue growth to return to slightly more historical levels in which case we get to $310B in the same period, and slapping a 7x multiplier on that we get a market cap of $2.1T or so - which would be nice 40% increase from today's levels.

tecmo
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