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Its been a while since I did a sum of the parts.

			TTM	Q4	Q3	Q2	Q1
Cloud			43.23	11.96	11.35	10.35	 9.57
YouTube			36.14	10.47	 8.92	 8.66	 8.09
Advertising	       269.21	73.64	67.61	65.37	62.59
Other Bets		 1.44	 0.40	 0.39	 0.37	 0.28
		       350.02	96.47	88.27	84.74	80.54

Attaching multiples to these can be tricky, but here is one take:

	           Valuation	Multiple
Cloud	           432.3	10
YouTube	           289.1	8
Advertising	  1346.0	5
Other Bets	     7.2	5
	          2074.7	

I don't think YouTube is "worth" $500B, but its clearly growing quickly and could be worth as much as $300B (perhaps even higher). Definitely a significant component of the overall company value. The Cloud business (which I would include AI in) is probably worth almost $500B - note: OpenAI just raised $40B at a valuation of $300B; their revenues are around 1/3 ($12B) of Google Cloud, but are growing much faster of course.

Reminder: Google has about $100B of cash on hand.

BTW: I think Waymo is probably worth much more than $7.2B - possibly as much as $15B or higher; but its very difficult to assess this segment of their business.

For posterity
GOOG : $158 / share --> $1,920B Valuation

tecmo
...

For comparison

          Revenue     Valuation      Multiple
YouTube   $36.1B      $360B??        10x??
Netflix   $39.0B      $391B          10x

          TTM     Q4       Q3      Q2      Q1 
YouTube   36.14	  10.47	   8.92	   8.66	   8.09
Netflix   39.00   10.25    9.82    9.56    9.37

So last quarter was the first time YouTube exceeded Netflix revenue... a milestone worth noting for sure!

tecmo
...

One additional note:

https://blog.youtube/news-and-events/introducing-p...

YouTube has likely figured out that they have saturated their market for full Premium and now are going down market. This product will likely cannibalize a few full Premium subs, but I expect it to pull in a lot more paying subscribers.


tecmo
...

YouTube has likely figured out that they have saturated their market for full Premium and now are going down market.

Hmmm, I perceive the reverse when looking at the broader scheme of things. They are slamming the ads so hard to make the free experience painful, that it's driving more people to the premium. I don't know about where you are, but multiple ads, one of them 4 minutes long, in the middle of a 6 minute video is pretty common in (say) France, and they mess with the controls so you can't skip them.

I expect a bright future for premium, based on the cruel economics of enshittification.

Jim

Hmmm, I perceive the reverse when looking at the broader scheme of things.

I have been a full Premium subscriber for a few years now, so I am not aware of how shittified the ad experience is.

PS: Download is one of the key features for me as I travel a fair bit...

tecmo
...

I have been a full Premium subscriber for a few years now, so I am not aware of how shittified the ad experience is.

I see the difference. My wife is a subscriber and I'm not, and she gives me the most expressive glance when she hears the start of a screaming ad from my iPad...
I don't care about the cost, but I prefer to be without the tracking and profiling that the subscription necessitates. (other than deleting all cookies after each visit and logging in again each time)

The interesting thing is how much the ad situation changes depending where I am. In some places I get the same single ad over and over and over. I counted 16 times in one video. For the longest time there were no ads at all inside Monaco.

Jim

I'm not sure we can still view Netflix as worth more than Youtube. It is probably the other way around.

Youtube has continued to draw market share while Netflix is mostly range bound (7.5% to 8.5% of market). In June, in the U.S., Youtube was up to 12.8% of market share. It was hovering around 10% last June/July. What's telling to my mind is that Youtube's growth is slow and steady. It is suggestive of a widening moat with respect to a particular kind of content.

The monthly figures: https://www.nielsen.com/data-center/the-gauge/

From a recent Barron's article:

These two streamers come at viewers in different ways. Netflix’s income comes largely from subscription sales, and YouTube is primarily an ad-based service. But each is sliding into the other’s business model. Netflix has successfully launched a less-expensive ad tier to its offerings. YouTube now gets substantial subscription revenue from streaming cable channels on YouTubeTV, the valuable NFL Sunday Ticket package, and other services.

The financials tip even more in YouTube’s favor. Netflix saw sales of $39 billion last year, and on Thursday it raised the midpoint of its 2025 revenue guidance to $45 billion, up 15% on the year. According to Melissa Otto, head of Visible Alpha Research at S&P Global, analysts’ expectations are for ads to provide about a third of that growth.

All of that pales in comparison to what is happening at YouTube. Analyst Laura Martin of Needham estimates that YouTube revenue was $58 billion in 2024, and will be $70 billion in 2025, with $30 billion of that coming from subscriptions. She projects that a stand-alone YouTube would have a market capitalization of $720 billion. Netflix has a market cap of $556 billion.

YouTube became No. 1 by capturing a young demographic and holding on to those viewers as they aged. In doing so, it disrupted how people thought of “television” and who made it. This provides a great financial advantage to YouTube. In the second quarter, 52% of Netflix’s costs were content expenses. YouTube passes these expenses to its creators, keeping it relatively asset-light and increasing profit margins.

Available here if you Apple news: https://stocks.apple.com/AWn_itis0TXKoP3zRIhsTLA

Different business models, of course. But depending on you break things up, YouTube is the number 2 search engine in the world, behind its parent Google and ahead of Amazon. And it has a very large presence with younger demographics.

Netflix's market cap is down to $515 billion since that was written. I'd say $720 billion for Youtube is overpriced, and I don't know what exactly I'd fairly value Netflix at, but I'll take the "over" if the bet is against Netflix going forward.

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