$GOOG valuation model (2026)

When I last posted about Google’s valuation in 2025, an estimated intrinsic value was 259. After holding onto the shares during the upswing, I decided to sell in November 2025 at 314 USD. Since then, price increased by another 10%, and now I’m eager to take another look at this dominant search giant. With a major capacity expansion cycle on full throttle, building a model had its challenges.

Key assumptions:

• Explicit average 5Y/5Y growth @ 17%/9.5%

• Long-term growth in perpetuity @ 2.6%

• Gradual improvement in Adj. EBITDA Margin by 8% in Y10

• WACC @ 9.6%

• Adj. EBITDA exit multiple of 13.3 calculated using Mauboussin’s P/E framework

• Tax rate 19% - in line with marginal rate

• The input that drives reinvestment is forward-looking Sales to Capital ratio = 0.5, linearly regressed to the Software (Entertainment) average rate of 1.00 in year 10

Growth profile (for context)

Google has achieved an 18% CAGR in revenue over the past 10 years. More recently, the growth rate has been more moderate, typically between 10% and 15%.

In the 2025 reporting year, 56% of Google’s revenue comes from the Search segment, 12% from Cloud, and 10% from YouTube Advertising Revenue. The global search engine market share increased from 89.54% in June 2025 to 91.32% in July 2026, reinforcing Google’s dominant position in search.

While antitrust concerns around Alphabet’s core search business have made headlines, analysts retain confidence in Alphabet’s overall strength and foresee the firm remaining at the forefront of a variety of verticals, including search, artificial intelligence, video, and cloud computing.

Moat

Google possesses a wide moat due to its intangible assets, network effect, cost advantage, and customer switching costs.

One powerful illustration about the depth of Google’s moat can be found in the PC market. Most PCs worldwide run Windows with Microsoft Edge pre-installed. However, most Windows users prefer installing Google Chrome and using Google Search rather than sticking with Bing on Microsoft Edge.

Verdict

On average, analysts think Google is undervalued by 20%. My valuation at $335 indicates that the stock is fairly valued. It can still be a worthwhile addition for a patient investor. Recall WB’s quote?

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

Keep in mind that this is an estimate - just like any DCF model. I’m not claiming perfection, but I do trust these calculations to assist with my own investments. Hopefully, they can help inform yours as well. Feel free to share it online and credit my page as the source. Look at it as a thinking tool, not necessarily as a stock-picking tool.

Disclaimer: This post is for informational and educational purposes only. I do not own shares directly in GOOG (only via ETF) but can buy/sell them at any time after this post is published. Not financial advice. Do your own research.