Alphabet (GOOG) -), the parent company behind Google and YouTube, beat Wall Street expectations in its second-quarter earnings July 25 at $1.44 per share. The company reported $74.6 billion in revenue for the quarter, $7.67 billion of which came from YouTube ads alone.
SVB MoffettNathanson's co-founder and senior analyst, Michael Nathanson, thinks Alphabet is poised to become the world's leading media company. And he thinks that YouTube, which is currently valued at $40 billion, could soon be worth $240 billion.
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In a world that is seeing increased rates of cord-cutting amid a constant growth in streaming, Nathanson told CNBC that YouTube is in the best position to take advantage of the current environment. And advertising is only one small piece of the puzzle that will get them there.
"There's so many other growth drivers ahead that the growth will accelerate going forward because of the drivers. If you look at it as a classic internet advertising play, you're missing the big picture," he said. "It's so well-positioned that the growth will be double-digits for the next couple of years, pretty easily."
One of those drivers, Nathanson said, involves YouTube TV. And although he acknowledged that the streaming business is a tough one to be successful in, he thinks that YouTube is uniquely positioned to become one of the major streamers by the end of the decade.
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"We think in four or five years time that YouTube TV will be a bigger provider of channels than Comcast or Charter," Nathanson said. "We think YouTube TV will get over 10 million subs in four or five years. And then they'll really be in the driver's seat of deciding what the next bundles look like."
And growth in YouTube will help position the platform to sell channels, eventually providing a central location through which people can gain access to all streaming content (while becoming dominant in the world of streaming).
"YouTube is positioned to be a gatekeeper going forward. Everyone complains that there's no central place to see what I have," he said. "They can be one of the two or three major companies in controlling the interface."
