Alphabet (GOOGL): fair value

Fair-value band

The normal range for this name runs from $214 (cheap) to $410 (expensive); it is now priced at $280.

That is 0.5σ below this name's own normal premium.

Is Alphabet undervalued?

Fair, relative to its own history. Alphabet trades at $280, 16% above the fair value this model estimates, but it has habitually traded 30% above fair value, and today's gap is 0.5σ below that norm, within the range it normally trades in, so the verdict is Fair: priced normally for itself, not necessarily fairly valued.

Diligence checklist

5 pass · 2 fail · 4 no data

• PASSCash actually collected from profit, median of the last 3 years: 120%XBRL · Over the last three years Alphabet has typically got $1.20 of real cash for every $1 of reported profit, which means profits are real and not just numbers on paper. That's a good sign.
• FAILGap between paper profit and real cash: +7.3%XBRL · Alphabet booked more profit than it collected, by 7.3% of everything it owns. I flag anything past 5% either way, and this is the direction that worries me: the further profit runs ahead of cash, the more of it is an accounting entry waiting to be reversed.
• PASSDebt compared to one year of cash earnings: 0.22xXBRL · Alphabet could pay off everything it owes, net of the cash it holds, with 0.22 of a single year's earnings. My limit for a name I would buy is three years, so debt is not a risk here.
• PASSHow much more it earns on capital than that capital costs: +17.04ppXBRL · Return on capital is far higher than what that capital costs, so every dollar Alphabet puts to work turns into much more than a dollar of value. A +17 point gap is wide: reinvesting is genuinely worth doing here, which is what makes growth valuable rather than merely expensive. The gap is wider than it was at the start of the window.
• PASSStock sold by executives and directors on the open market, last 6 months: $0.0MEDGAR · Nobody running Alphabet sold a single share on the open market in the last 6 months. That is the alignment I want: the people with the most information about the business are keeping their money in it. A further $4.4M went out under pre-planned 10b5-1 schedules, which I don't count: those sales are set up months ahead and say nothing about what management thinks today. Another $15.1M was sold by holders of 10% or more of the company (Gv 2019 Gp, L.L.C. $15.1M). They file the same forms but they don't run the business, so they don't count toward this test. Options being exercised, and shares held back to cover the tax on them, are not sales and I don't count them either.
• N/AHow long the CEO has run this company: n/aTEXT · I couldn't establish when Alphabet's current chief executive took the job: no appointment appears in the 8-K item 5.02 history.
• N/AProfit margin held up during the last sales slump: n/aXBRL · There's no revenue downturn in Alphabet's filed record, or gross profit isn't tagged, so this test has nothing to measure. It needs a bad patch to look at: without one, whether customers would stay through a price rise is untested rather than proven.
• FAILNormal profit margin across a full business cycle: FCF margin 4.7% vs 21.1% medianXBRL · Alphabet is earning a 4.7% cash margin against a long-run average of 21.1%, 78% worse than normal. Either this is a trough the business climbs out of, or the average no longer describes it. My valuation grows the average, so it assumes the first: if that's wrong, the value on this page is too high. Across the window the margin ran between 4.7% in September 2026 and 26.2% in September 2023.
• N/AHow much of the stock trades on an average day: $9,972MMARKET · Alphabet trades so much volume that this basically isn't a concern. There's no pass or fail here because the answer depends on how big a position I'd actually want to take.
• N/AShare of revenue from its single biggest customer: not establishedTEXT · I fetched and read Alphabet's February 5, 2026 10-K but found no sentence about customer concentration. That isn't the same as the filing saying there is none: it may simply be worded in a way my search doesn't catch. Read Item 1 and the concentration-of-risk note yourself before trusting this row. filing ↗
• PASSWhether the company switched auditors in the last 2 years: noneEDGAR · Companies sometimes switch accounting auditors right before something bad is uncovered which can be a warning sign. Alphabet hasn't changed auditors in the last 2 years, so there's no such red flag here.