Google gets buy rating and $500 price target

I generally look at analyst ratings with a subjective eye, as many pan out and many don't pan out. Stifel Nicolaus re-affirmed its rating on Google common shares last Friday with a $500 target share price. While I can see the reason for being behind and continuing to support a buy rating on Google, I do think that the $500 price target is a bit much. Ok, way, way too much. Strange thing is, GOOG shares will probably get there.

Google's saving grace for revenue at this time is auctioning text advertising space next to the billions of Internet searches Google customers perform each month. Yes, it's released a pretty incredible stream of products recently, as it launches early and often. But, not enough time has passed for the success of many of these Google products to be shown -- if they will be successful. Google Finance, Google Calendar, Google Checkout are all recent web product releases that have excellent potential. The question of the hour is how Google plans on making money on any of these services.

Yes, Google can ride on the wave of revenue it's currently enjoying with Internet search advertising. That has enabled the Google folks to hoard back a pretty decent amount of cash. But, its burn rate could increase (take a look at this data center in Oregon) based on the product trajectory it has and will have, and its diversification of revenue most likely needs to expand at the same time, for sanity's sake. So, at a $500 per share price target, what's the justification? Bubbles?