Android, Chrome Could Push Google Past $600

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (Trefis) -- Google's (GOOG) search market share slipped slightly in July to 65.1% from 65.5% in June going by ComScore estimates, but it still commands the highest market share over competitors like Microsoft(MSFT) Bing and Yahoo!(YHOO), both of which saw slight gains during the same period. Growing adoption of Android operating system (OS) for mobile devices, quicker searches through Google Instant, and increasing use of Google Chrome browser have all aided in maintaining Google's leadership in the global online search space.

While we estimate Google's search market share will increase from 69.5% in 2012 to 72.8% by the end of our forecast period, Trefis members expect an increase from 72.7% in 2012 to 74.4% during the same period. The member estimates imply an upside of 25% to the Trefis price estimate for Google's stock.

We currently have a Trefis price estimate of $596 for Google's stock, about 15% above the current market price.

Google's growth in the mobile search market is much faster than the overall search market. It unequivocally leads the mobile search market with a share of 97%, while its overall market share is around 66%. Google has mainly Android OS to thank for this success which has brought a significant rise in advertising revenues for the firm. In the last quarter, Google reported increases in both aggregate paid clicks and cost-per-click, which grew by 18% and 12% respectively year-on-year. (See Google Shares Jump on Earnings, Fully Valued at $600 ) The rise is also partly attributable to faster searches through the Google Instant feature, which is designed to reduce 2 to 5 seconds in overall search query time.

Google is trying to repeat the success it has had with Android OS now with Chrome, which is slowly gaining ground in the browser market that is dominated by Microsoft's Internet Explorer (IE) followed by Firefox. According to Pingdom's analysis using StatCounter data, between June 2010 and July 2011, Chrome's market share doubled from 10% to 20%, while IE's share declined by 20% and Firefox saw a slight decline as well. The analysis further forecasts that Chrome will outperform IE and Firefox in June 2012 and will lead the browser market with 50% share in November 2012. This prediction bodes well for Google's overall search business.

Our complete analysis for Google's stock is here.

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