The early star of Google parent company Alphabet's financial success in 2021 is YouTube.

Google's YouTube is proving to be this generation's television, according to an analyst

As people continued to consume vast volumes of entertainment at home despite the pandemic, Alphabet announced Tuesday after the close that YouTube commercial revenues increased by 49% year over year to $6 billion. YouTube's revenues increased by 46 percent in the fourth quarter of 2020, compared to a 32 percent increase in the third quarter.

In a new research note published on Wednesday, Jefferies tech analyst Brent Thill said, "YouTube is the new TV." "The word "YouTube" refers to bulbous TVs that existed before flatscreens, which is humorous. Instead of linear TVs, YouTube on wired TV is now the preferred video viewing experience, and ad budgets are fast following suit."

Although YouTube shone in the first quarter, Alphabet as a whole had a strong start to the year. Operating profit margins increased by 230 basis points to 36% in the fourth quarter. Google Cloud sales grew 45.6 percent, Search sales increased 30.1 percent, and Google Network sales increased 30.1 percent.

  • Revenue: $45.6 billion, minus traffic acquisition charges, compared to $42.6 billion projected and $33.71 billion years over year.
  • GAAP earnings per share in the first quarter were $26.29, compared to $15.64 predicted and $10.79 year over year.
Google announced a new $50 billion stock buyback to round off its upbeat earnings report.

Alphabet's stock gained 4% in Wednesday's trade.

In a client note, Guggenheim Securities analyst Michael Morris said, "Alphabet further improved its case as the most convincing ideas in our coverage." Morris retained a Buy rating on Alphabet, increasing his price target to $2,850 from $2,400.

Others on Wall Street agreed with Thill and Morris' assessments of Alphabet's quarter and outlook.

"We come away from the first-quarter print more positive on Alphabet's medium-term sales AND margin forecast, in both the main Google services market and Cloud," said Deutsche Bank analyst Lloyd Walmsley, who now has a $3,050 price target and a Buy rating on the portfolio.

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