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These links have plots of Price/Sales versus forward one year, two year, and three year CAGR for GOOG:

1 year
https://www.dropbox.com/scl/fi/l4y2mg691o8p8do3bnv...

2 year
https://www.dropbox.com/scl/fi/fje2cm5tisuy5pc04h2...

3 year
https://www.dropbox.com/scl/fi/ol8lkdwrygkn38ojp4e...

Price/Sales data is from macrotrends.com, from 2009-12-31 through 2025-03-05.
GOOG share price is at 165 as I type and TTM Revenue per Share as of Dec 2024 was 26.25 (per macrotrends), so the P/S stands today at 6.3

The forward CAGRs have been averaged following (somewhat) Jim's practice of removing endpoint price effects. I averaged over two months. For example, to compute a one year averaged forward CAGR I first compute all the CAGRs from dates two months (40 trading days) prior to the one year mark through two months after the one year mark, and average those CAGRs. Same process for 2 and 3 year averaged forward CAGRs. The colors in the plots denote dates, I may do something with that info later.

I'm sanguine about Alphabet's ability to adapt to the evolving search/AI landscape, and they're into other leading edge areas as well.

The plot legends are correct, but looks like I posted the links in order of 3 year CAGR, 2 year CAGR, and 1 year CAGR i.e. the reverse of what I typed into the post.

Just a small health warning...P/S has worked well for the firm in the past, but perhaps not as well in future.

It has been a more stable metric than earnings because their net margins have been somewhat variable, and the P/S multiples themselves have been lofty for a very long time for two pretty reasonable reasons: their net margins have been very high, and they have been growing very quickly.

With the capex program that they are looking at the net margins may be on a downtrend, so a move to valuing on a multiple of earnings (or smoothed earnings) may start to work better. This was always going to be the endpoint of their growth journey, so it's a matter of deciding if now is the time to make the switch.

Jim

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