On the earnings call, Google said viewers are watching 4 billion hours of videos a month, and that's translating to advertising revenue, with advertisers increasing their spend 50% from 2011 to 2012. The top 25 advertisers now spend over $150 million each per year on YouTube, helping Google's move to mobile.
The bear case on Google has always been that mobile does not monetize as well as desktop, be it search or ads, but recent trends suggest differently. Kirjner notes that Google Sites revenue grew 20% year over year. That takes into account PC search, mobile search and YouTube. If PC search growth is declining with the overall PC decline, than perhaps mobile is monetizing better than people think.
Kirjner places heavy importance on mobile, and others on Wall Street agree. Following Google's earnings report, J.P. Morgan analyst Doug Anmuth wrote that he feels better about the mobile transition going forward. "As the business continues to shift toward mobile and advertisers think holistically about clicks rather than about which devices they're coming from, we think the Street will as well, and that bodes well for Google," he wrote, in a research note.As mobile becomes more prevalent in day to day life, the fear is that apps would hurt Google's core business, specifically e-commerce. Amazon (AMZN - Get Report) and eBay (EBAY - Get Report) account for almost a third of all Internet e-commerce, but so far, that has not affected Google's search revenue. Kirjner believes that Google gets 20% to 25% of its search revenue from e-commerce, but if every user shifts to apps, "the impact on Google search revenue growth will be material but limited." As Google continues to diversify and move into other revenue streams, Kirjner believes there's a chance for innovation from these streams, such as the aforementioned Google Glass. Aside from YouTube, there's also the display business and the device business (which includes Google's Nexus lineup and the Motorola offerings), as well as Google Play. Recent rumors suggest that Google could launch its own retail stores to show off the new hardware attached to the Google name, but according to sources close to the situation, the rumors could be overblown. Google is growing at such leaps and bounds, with years of research and development starting to pay off. It almost seems that a share price of $1,000 is inevitable, as long as the company continues to execute on its plan. Not bad for a company that started out of a Stanford lab. --Written by Chris Ciaccia in New York >Contact by Email. Follow @Commodity_Bull