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Alphabet Inc. (GOOGL) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Alphabet Inc. (GOOGL)

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Intrinsic Value (DCF)

Current$335.97
→
Intrinsic$293.13
-13%
$183.09$293.13$558.76
Market implies 29% growth for 5 years
GOOGL appears fairly valued — current price aligns with our DCF estimate.
At $336, the market prices in continued strong cash flow growth (29%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $183 → Bull $559. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →21%23%25%27%
6%$426$461$498$538
8%$251$272$293$316
10%$176$190$205$221
12%$135$145$156$168

Bull Case

  • Bull case ($559) offers 66% upside at 30% growth, 7% discount

Bear Case

  • Bear case ($183) implies 46% downside at 20% growth, 10% discount
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$90.95B
Year 2$113.69B
Year 3$142.12B
Year 4$177.65B
Year 5$222.06B
Terminal$4.53T

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate8.1%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$72.76BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is GOOGL stock undervalued or overvalued?
🔴 OVERVALUED

GOOGL trades at $335.97 vs. our DCF-derived intrinsic value of $175.12, implying -44% downside. Using a 8.1% WACC and 25.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($278.20) suggests limited upside.

What is GOOGL's intrinsic value?

Using a 5-year DCF model: Base FCF of $72.76B, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 8.1% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $2.00B net debt and dividing by 12.45B shares: Bear $112.39 | Base $175.12 | Bull $278.20. Current price $335.97 implies -44% to base case.

How is GOOGL's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=8.1%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($2181.66B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 30.0x.