As of May 23, 2025, Alphabet Inc has a Discounted Cash Flow (DCF) derived fair value of $247.35 per share. With the current market price at $170.87, this represents a potential upside of 44.8%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $194.90 |
| DCF Fair Value (10-year) | $247.35 |
| Potential Upside (5-year) | 14.1% |
| Potential Upside (10-year) | 44.8% |
| Discount Rate (WACC) | 7.2% - 9.8% |
Revenue is projected to grow from $350018 million in 12-2024 to $819804 million by 12-2034, representing a compound annual growth rate of approximately 8.9%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2024 | 350018 | 14% |
| 12-2025 | 390914 | 12% |
| 12-2026 | 434003 | 11% |
| 12-2027 | 484712 | 12% |
| 12-2028 | 532230 | 10% |
| 12-2029 | 585325 | 10% |
| 12-2030 | 641538 | 10% |
| 12-2031 | 693843 | 8% |
| 12-2032 | 743586 | 7% |
| 12-2033 | 780765 | 5% |
| 12-2034 | 819804 | 5% |
Net profit margin is expected to improve from 29% in 12-2024 to 33% by 12-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2024 | 102818 | 29% |
| 12-2025 | 117636 | 30% |
| 12-2026 | 133654 | 31% |
| 12-2027 | 152609 | 31% |
| 12-2028 | 171164 | 32% |
| 12-2029 | 192112 | 33% |
| 12-2030 | 210562 | 33% |
| 12-2031 | 227729 | 33% |
| 12-2032 | 244055 | 33% |
| 12-2033 | 256258 | 33% |
| 12-2034 | 269071 | 33% |
with a 5-year average of $32638 million. Projected CapEx is expected to maintain at approximately 12% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2025 | 37315 |
| 12-2026 | 42525 |
| 12-2027 | 47552 |
| 12-2028 | 53536 |
| 12-2029 | 56703 |
| 12-2030 | 62558 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 54 |
| Days Inventory | 3 |
| Days Payables | 18 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 9M/2025 | 125530 | 14585 | 34246 | 5277 | 71422 |
| 2026 | 190477 | 22094 | 50695 | 5429 | 112259 |
| 2027 | 216681 | 25228 | 56618 | 6446 | 128390 |
| 2028 | 243433 | 28295 | 62168 | 6841 | 146129 |
| 2029 | 270058 | 31758 | 68370 | 7065 | 162864 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 194.90 | 14.1% |
| 10-Year DCF (Growth) | 247.35 | 44.8% |
| 5-Year DCF (EBITDA) | 158.05 | -7.5% |
| 10-Year DCF (EBITDA) | 205.55 | 20.3% |
Is Alphabet Inc (GOOGL) a buy or a sell? Alphabet Inc is definitely a buy. Based on our DCF analysis, Alphabet Inc (GOOGL) appears to be significantly undervalued with upside potential of 44.8%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $170.87.