Google Has a High Bar to Clear

Shares of Google (NASDAQ: GOOGL  ) have been on a veritable tear over the last year. Although seeing a stock double is not uncommon in this market, especially in the land of small-cap tech, seeing a $185 billion company grow into a $370 billion company is quite rare. Unfortunately, while this is great for investors who purchased shares at $500 or so, the investment case becomes much trickier to justify at north of $1,100.

Google has lofty expectations to meet
Google isn't particularly expensive. It trades for 21 times fiscal 2014 estimates. This certainly isn't cheap, but in return, investors are buying a pretty robust growth story. To put this growth in perspective, Google is set to grow its top line by a whopping 39.7% over 2013. If the analyst community has it correct, it should grow another 16.4% in 2014.

This is superb growth, particularly from a $59 billion revenue base. But it is also important to note that these estimates aren't based on management guidance, but on sell-side estimates that vary pretty wildly. Consensus for fiscal 2014 sits at $69.43 billion, but the estimate range goes from an ultra-frothy $79 billion to an uber-bearish $54 billion, which would represent a very unlikely year-over-year decline.

However, it could meet those expectations
The numbers are interesting, but what will drive Google's results going forward? How does Google get there? The most obvious answer is the continued growth in the company's core advertising business. While there's a lot of buzz around Google's Android platform, as well as its devices business through its acquisition of Motorola Mobility, this isn't what pays the bills, not by a long shot.

This represents an interesting opportunity. The core revenue streams from Google's sites and partner sites -- which make up more than 90% of revenue -- are safe and growing. This means that any incremental opportunities, such as success with Motorola Mobility or Google Glass taking off, could be icing on the cake.

The Apple comparison
A popular comparison to Google has been Apple (NASDAQ: AAPL  ) . Why? Well, Google makes the Android OS and it makes smartphones, so naturally, Apple is a competitor. Android-powered devices do fight Apple's iOS-based devices in the market, and Motorola's own devices sell against Apple's products, but the comparison on a valuation basis isn't valid.

In particular, some claim that Google at a P/E of 30 would be overvalued compared to Apple with a P/E of 14. However, Google's top and bottom lines are growing like crazy, while Apple's top line has seen much slower growth and its bottom line contracted during its fiscal 2013. If Apple was growing like Google, then it would have a multiple like Google's. Alas, it doesn't because it isn't.

Foolish bottom line
The bottom line is that Google is a very high-quality growth company and it deserves a richer multiple than even the mighty Apple. How much richer remains to be seen. But if the company can actually hit consensus for fiscal 2014, then it doesn't look all that expensive today at 21 times those estimates. Sure, it's not a deep-value stock. Frankly, it's hard to see a significant amount of upside from here, and one slip or miss sends estimates and the share price down. It's not the sure-fire bet that the bulls think, but Google isn't quite the bubble that some paint it to be.

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