$GOOG is 2 or 3 times what it was before the AI boom, depending on when exactly you define "pre-AI boom", so this isn't quite the full story. I tended to think Google was undervalued in the early 2020s and people weren't giving enough credit to how dominant e.g. YouTube was, so maybe it's accurate now and Google won't have as strong an AI correction even if one happens.
It’s sitting at ~29 forward/trailing p/e which means that it’s likely to drop 30% if there’s a correction and even more if there’s a broader economic thing going on that causes ad spend to go down.
That's still less than a lot of other tech companies. And "15 is the natural long-run P/E" is just a rule of thumb, not some kind of iron law.
Something under-appreciated: If you pretend a company is paying out 100% of profits as dividends (which it theoretically potentially could, and is useful as a financial modelling tool), then the inverse of P/E, E/P, is an interest rate on the price of the stock.
Ideal P/Es thus shouldn't be flat, they should be tracking long-term bond rates. This isn't an empirical observation, just a theoretical one of what "ideal" should be. But one should rationally expect P/Es to go up when interest rates drop.
It is disappointing to me that even Shiller doesn't really consider this much.