I have little doubt that Google is worth $600 under very conservative valuations. The problem is that it sports a $166 billion market cap and does not return any cash to shareholders. Not only do they not return any cash to shareholders but they give out stock options, which means new stock is sold into the market each year. The founders are constantly selling shares as well. It requires an inflow of new money just to absorb the new stock.
We are reaching ludicrous valuation levels but it will be difficult for the shares to rally without a repurchase plan. Their was discussion of a repurchase plan a year ago and I believe we will see a lot of pressure on the company to return cash if the shares dip much further. The founders behave as if they are the sole owners of the company and are ignoring the shareholders. Google needs to start returning cash to shareholders yesterday.