S&P Global (SPGI): Revisiting Valuation After New Google Cloud and AWS AI Partnership Announcements

S&P Global (SPGI) is leaning hard into enterprise AI, pairing a new multi year partnership with Google Cloud and fresh AWS integrations to push its data deeper into customers everyday workflows.

See our latest analysis for S&P Global.

The steady drumbeat of AI partnerships and fresh debt issuance has not yet translated into a breakout move, with the share price at $501.03 and a roughly flat 1 year total shareholder return. However, a strong 3 year total shareholder return suggests the long term growth story is still firmly intact while near term share price momentum has cooled.

If this kind of data and AI positioning has your attention, it is a good moment to see what other tech names are setting up for the next leg higher with high growth tech and AI stocks.

With shares lagging over the past year but still trading at a double digit discount to analyst targets, investors face a key question: Is S&P Global quietly undervalued, or is the market already pricing in years of AI driven growth?

Price-to-Earnings of 36x: Is it justified?

On a headline basis, S&P Global looks richly priced, with its recent close of $501.03 reflecting a 36x price to earnings multiple that exceeds both peers and the broader Capital Markets industry.

The price to earnings ratio compares what investors are willing to pay today for each dollar of current earnings, a key yardstick for established, profitable information and analytics businesses like S&P Global. For a company with high quality earnings, accelerating profit growth and durable competitive advantages, a premium multiple can signal that the market is factoring in years of continued expansion rather than near term results alone.

However, the gap is stark. S&P Global trades at 36x earnings, versus about 25.4x for the US Capital Markets industry and 31.9x for its direct peer set, while our fair price to earnings estimate sits closer to 17.8x, a level the market could converge toward if expectations temper or growth normalises.

Explore the SWS fair ratio for S&P Global

Result: Price-to-earnings of 36x (OVERVALUED)

However, investors should watch for slower capital markets activity or weaker credit demand, which could pressure ratings and data revenues, and justify a lower multiple.

Find out about the key risks to this S&P Global narrative.

Another Angle on Valuation

Our DCF model paints a different picture, with an estimated fair value of $312.45 per share, implying S&P Global is trading well above what its future cash flows might support. Is the market overpaying for the AI and data story, or is the model too cautious?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out S&P Global for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 903 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own S&P Global Narrative

If you see things differently or want to stress test the assumptions with your own inputs, you can build a personalized view in just a few minutes: Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding S&P Global.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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