DCF Studio

    GOOG · NMS · Communication Services

    Alphabet Inc.

    Also onConsensus Drift

    Implied value per share

    USD 282.29

    Market price

    USD 278.04

    Implied upside

    +1.5%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 14.8% of revenue against depreciation of 4.6%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Current EV/EBITDA of 22.3x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 282.29+1.5%
    Exit multiple
    USD 492.05+77.0%
    Market price
    USD 278.04

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn184bn368bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 499.5bnUSD 634.5bnUSD 786.5bnUSD 950.8bnUSD 1120.3bnUSD 1285.6bnUSD 1436.0bnUSD 1559.9bnUSD 1646.7bnUSD 1687.9bn+14.5%
    EBITUSD 147.4bnUSD 187.2bnUSD 232.1bnUSD 280.5bnUSD 330.6bnUSD 379.3bnUSD 423.7bnUSD 460.3bnUSD 485.9bnUSD 498.0bn+14.5%
    NOPATUSD 123.5bnUSD 156.9bnUSD 194.5bnUSD 235.2bnUSD 277.1bnUSD 318.0bnUSD 355.1bnUSD 385.8bnUSD 407.3bnUSD 417.4bn+14.5%
    Add depreciation & amortisationUSD 22.8bnUSD 29.0bnUSD 35.9bnUSD 43.4bnUSD 51.2bnUSD 58.7bnUSD 65.6bnUSD 71.3bnUSD 75.2bnUSD 77.1bn+14.5%
    Less capital expenditureUSD -74.1bnUSD -88.7bnUSD -103.3bnUSD -116.8bnUSD -128.1bnUSD -136.0bnUSD -139.7bnUSD -138.5bnUSD -132.2bnUSD -121.2bn+5.6%
    Capex, % of revenue14.8%14.0%13.1%12.3%11.4%10.6%9.7%8.9%8.0%7.2%-
    Less increase in working capitalUSD -12.5bnUSD -17.4bnUSD -19.6bnUSD -21.2bnUSD -21.9bnUSD -21.4bnUSD -19.4bnUSD -16.0bnUSD -11.2bnUSD -5.3bn-9.1%
    Free cashflow to firmUSD 59.8bnUSD 79.8bnUSD 107.5bnUSD 140.6bnUSD 178.3bnUSD 219.3bnUSD 261.6bnUSD 302.5bnUSD 339.0bnUSD 368.0bn+22.4%
    Discount factor0.95490.87070.79390.72380.66000.60180.54870.50030.45620.4159-
    Present valueUSD 57.1bnUSD 69.4bnUSD 85.4bnUSD 101.8bnUSD 117.7bnUSD 132.0bnUSD 143.5bnUSD 151.3bnUSD 154.7bnUSD 153.1bn-
    Present Value Of The ForecastUSD 1165.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.151Reported 1.226, pulled toward 1.0 (Blume)
    Cost of equity9.76%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 175.3x interest cover. Book interest / average debt was lower, at 1.8%.
    Market capitalisationUSD 3418.2bn98.3% of capital
    Total debtUSD 59.3bn1.7% of capital, book value as a proxy
    Tax rate16.2%Effective, capped at statutory
    WACC9.67%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 282.29

    66% of EV

    Forecast FCFF, final year
    USD 368.0bn
    Capex at depreciation, working capital in reinvestment
    USD 417.4bn
    Less reinvestment at g/ROIC (10.6% of NOPAT)
    USD -44.1bn
    Capitalised
    USD 373.4bn
    ROIC (reported)
    23.7%
    Terminal value, undiscounted
    USD 5334.8bn
    Terminal value, discounted
    USD 2218.9bn
    Enterprise value
    USD 3384.8bn
    Less net debt
    USD -67.6bn
    Equity value
    USD 3452.4bn

    Exit at 20.0x EBITDA

    Value per shareUSD 492.05

    80% of EV

    Terminal value, undiscounted
    USD 11502.6bn
    Terminal value, discounted
    USD 4784.3bn
    Enterprise value
    USD 5950.2bn
    Less net debt
    USD -67.6bn
    Equity value
    USD 6017.8bn

    Spread between methods: 54%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.67%375.75391.88411.41435.42465.53
    8.67%314.72324.51336.10349.97366.78
    9.67%269.13275.20282.29290.63300.53
    10.67%233.90237.67242.05247.15253.14
    11.67%205.95208.25210.92214.03217.67

    Outlined: this model. Green text: above today's price of 278.04. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year12.5%15.4%15.2%
    EBIT margin32.1%29.5%29.1%
    Discount rate-9.7%9.8%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.