Yes, this is another post about how cheap Google is.
Here’s the deal: Google’s net income for 2024 was $100 billion, with 55% of that coming from search.
With a $1.8 trillion market cap, Google would “only” need to have a PE ratio of 40—this is considering revenue only from its fast-growing segments like Cloud, YouTube, Waymo, etc.
To put it in context, here are a few companies with similar businesses and their high PE ratios:
Microsoft: 34
Netflix: 54
Tesla: 152
Palantir: 480
Google (excluding search): 40
This completely excludes the search business, as if it stopped generating any revenue overnight. That obviously won’t happen. Even if we see a slowdown in growth or a decline, search will still generate massive amounts of money, which can be used for significant buybacks—like those seen in the last quarter.
TL;DR: Google is basically a fast-growing company with a PE ratio of 40, plus a “dying” business that’s still going to generate around $50 billion annually for the next five years.