Cramer: Google's YouTube 'Not Being Monetized Correctly'

Cat videos are lucrative business. But Google's YouTube is still trying to determine how to tap into their full potential, argued Jim Cramer. 

"YouTube is not being monetized correctly," said Cramer, portfolio manager of the Action Alerts PLUS, which owns shares of Google parent Alphabet (GOOGL) - Get Report . "Alphabet is doing so well that they haven't had to focus on it."

Alphabet is certainly doing well, though not as good in its recent quarter as many analysts had hoped. The company, which reorganized as Alphabet last year, recently reported 17% revenue growth in the first quarter, while net income surged nearly 20%.

Results missed sky-high estimates on the top- and bottom-lines as investment in moonshot businesses such as self-driving cars ate into profit and Google Ad click costs fell 9%. The Internet giant currently generates nearly all its sales and profit from its core Google search and advertising business.

A properly monetized YouTube could provide a diversified and robust revenue stream to weather a downturn in online ad sales elsewhere in the business. 

"When they focus on it, I think it's going to be fantastic," added Cramer. "Susan Wojcicki, who runs it, is a genius and I think there's plenty of opportunity there."

Alphabet shares have fallen 6.6% year to date, but are up 33% in the past 12 months. The S&P 500 has gained 0.6% since the beginning of the year and is down 3.1% for the past 12 months. 

The stock fell slightly Tuesday to $726.90.