Google Is Still Undervalued: I'm Reinvesting All Dividends Into $GOOG
Why I Plan To Reinvest $2K Of Dividends Into $GOOG Every Month
The central argument for Google being undervalued is that its individual business units hold more intrinsic worth when analyzed separately than the combined value currently reflected in its market capitalization. At present, the market values the company around $3 Trillion, yet a more comprehensive breakdown points toward a more accurate valuation closer to $4 Trillion dollars. This view is supported by several major pillars that I will discuss.
Firstly, I published an article several months ago stating that I was adding $20K to this stock. In my mind, I planned to accumulate shares week-by-week, but the stock price took off before I was able to accumulate a $20K position. I was only able to secure a $10K position throughout June.
Since then, the stock has risen rapidly and my position is up almost 50%. This is great but I am annoyed I didn’t get to accumulate enough shares.
Yieldly reveals that GOOG has some of the healthiest financials in the industry. The business continues to have growing free cash flows that puts Google in the position to continue investing into growth initiatives over the next decade.
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A Resilient and Highly Profitable Core Business
The search division remains the cornerstone of Google’s success. Despite widespread concerns that artificial intelligence might disrupt traditional search, the platform continues to deliver growth and maintain dominance.
The integration of advanced features such as “AI mode” and Gemini models has not weakened the search business but instead reinforced its position. Search represents one of the most resilient franchises in technology, generating high levels of free cash flow and benefiting from unmatched user data. Analysts estimate this business segment alone at $1.25 Trillion, providing a solid foundation for the company’s overall valuation.
Funny enough, Gemini has recently topped ChatGPT on Apple’s AAPL 0.00%↑ app store. The sentiment around AI has changes so fast and I believe the greater interest in Gemini is attributed to the release of VEO 3, Google’s video generator.
Undervalued Growth Engines
Google Cloud is one of the fastest-growing units in the portfolio. While average analyst estimates place its value at approximately $572 billion dollars, a deeper look suggests this is conservative.
The business has transitioned from years of operating losses into rapidly expanding margins, signaling that profitability is only beginning to scale. Considering the accelerating adoption of cloud infrastructure and services worldwide, a valuation of $750 billion dollars is more justified.
Google cloud may be stealing market share from Amazon AMZN 0.00%↑ and Microsoft MSFT 0.00%↑. GOOG also outpaces companies like SNOW 0.00%↑, ORCL 0.00%↑, and SAP 0.00%↑
YouTube is another pillar of growth that continues to gain traction. When compared to Netflix, which trades at a similar market capitalization, YouTube looks significantly undervalued.
With a current estimate of $446 billion, the platform’s consistent audience growth, dominance in short-form video, and strong advertising model make a stronger case for a valuation closer to $510 billion. Unlike competitors that face pronounced seasonality, YouTube benefits from steady engagement across the calendar year, further strengthening its financial profile.
High-Potential Bets Beyond the Core
Waymo, the autonomous driving arm, is an overlooked asset that has the potential to add substantial long-term value. While many investors remain focused on Tesla’s TSLA 0.00%↑ ambitions in robo-taxis, Waymo has already launched a functioning autonomous ride-hailing service that is expanding in coverage and reliability.
We recently see news that Google’s Waymo is partnering with Lyft LYFT 0.00%↑ in certain regions.
Analysts often peg its value at $173 billion dollars, but considering its proven technological edge and regulatory progress, a valuation closer to $250 billion dollars seems more appropriate. Waymo may well emerge as one of the earliest and most successful commercial-scale applications of autonomous driving.
As the North American autonomous-vehicle rideshare market increasing over the next five years, Waymo is clearly positioning themselves to be a strong player.
The Artificial Intelligence Advantage
Artificial intelligence represents one of Google’s most powerful differentiators. DeepMind, along with custom-built Tensor Processing Units, has transformed AI from a cost center into a monetizable asset. Advanced models such as Gemini can be integrated across Google’s existing ecosystem, strengthening search, cloud, and advertising, while also serving as stand-alone products and services. Beyond internal synergies, Google has the opportunity to license AI technology and hardware, effectively creating a high-margin revenue stream. This segment is valued around $897 billion dollars and could expand significantly as adoption accelerates.
When each division is assessed independently, the evidence shows that Google’s total worth is materially higher than its current market valuation suggests. The company is not just a search giant but rather a collection of resilient, growing, and high-potential ventures spanning advertising, cloud, video, autonomous driving, and artificial intelligence.
With all of this in mind, I have decided to reinvest roughly $2K of my monthly dividend income into GOOG for the next quarter.
According to Yieldly, I will be collecting $5.5K this September and another $5K in October. Before the end of the year, I should be able to build my position up to $20K.
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I love GOOGL for a top AI play!