Investors are abuzz with the possibility of both Google (GOOGL) and Amazon (AMZN) reaching earnings multiples in the high 20s to low 30s. Following their recent earnings prints, the conversation has shifted from speculation to near-term probability. While both stocks have seen significant growth in recent years, there are several factors at play that could support this lofty goal.

To begin with, Google Cloud is poised to experience a significant acceleration in growth, with some estimates projecting it to reach the 80s by 2027. This would not only boost GOOGL’s earnings but also its valuation multiples. Meanwhile, AWS is expected to see a reacceleration of growth, with estimates suggesting a return to the mid-40% range by 2027. This would further support the argument for a higher valuation multiple.

So, why can’t these names eventually reach 30x? While it’s true that both stocks have seen significant gains in recent years, there are several reasons to believe that they still have room to run. Firstly, both companies have a proven track record of innovation and disruption, which has allowed them to maintain their market leadership. Secondly, their respective moats continue to widen, providing a barrier to entry for potential competitors. Finally, the shift towards cloud-based services and e-commerce is only just beginning, with both companies well-positioned to benefit from this trend.

Of course, there are also some challenges that these companies will need to overcome in order to reach such lofty valuation multiples. For example, Google faces increasing competition in the cloud space, while Amazon must continue to navigate regulatory hurdles and consumer privacy concerns. However, with their strong track records and continued innovation, it’s difficult to bet against these companies achieving their full potential.