Still known as Google at the time, the future Alphabet Inc (NASDAQ:GOOG)(NASDAQ:GOOGL) announced a game-changing $1.65 billion acquisition for video platform YouTube on Oct. 9, 2006. The deal has transformed Alphabet and become one of the most profitable acquisitions of all time.
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YouTube Bet Pays Off for Google
Alphabet reported second-quarter financial results on Wednesday. Among the highlights was the company bringing in $11.06 billion in advertising revenue from YouTube.
That figure doesn’t include YouTube subscriptions, which fall under a different category. Just based on ads alone, YouTube continues to be one of the biggest revenue drivers for Alphabet and shows the acquisition has more than paid off.
Here is the advertising revenue for YouTube over the last four quarters:
- Q3 2025: $10.26 billion
- Q4 2025: $11.38 billion
- Q1 2026: $9.88 billion
- Q2 2026: $11.06 billion
Add it up, and that’s $42.58 billion in advertising revenue over the last four quarters from YouTube. Not bad for a company that was purchased for $1.65 billion.
And of course that doesn’t include the subscription revenue from YouTube. In the last fiscal year, YouTube surpassed $60 billion in total revenue for the full year, counting advertising and subscriptions.
“The YouTube team has built and exciting and powerful media platforms that complement Google’s mission to organize the world’s information and make it universally accessible and useful,” former Google CEO Eric Schmidt said at the time of the acquisition.
“Together, we are natural partners to offer a compelling media entertainment service to users, content owners and advertisers."
YouTube celebrated its 20th anniversary on April 23, 2025. The video platform said over 20 billion videos have been uploaded on YouTube since the platform’s first video, “Me at the zoo,” 20 years ago. The video platform sees an average of 20 million videos uploaded every single day.
It’s crazy to imagine paying $1.65 billion for YouTube today, with the unit making over $9 billion each quarter for Alphabet in advertising revenue.
Analysts and market experts think if Alphabet ever spun off YouTube, the company could be worth up to $1 trillion on its own.
Talk about a huge potential return on a $1.65 billion acquisition.
YouTube Bet Pays off for Shareholders
Investors who liked the YouTube buyout or saw the potential for Google’s growth with the addition of the video component have been pleasantly rewarded.
Shares of Google traded at $430 on the morning of Oct. 10, 2006, the day after the YouTube acquisition was announced.
A $1,000 investment in Google stock could have purchased 2.33 shares at the time. Google had a two-for-one stock split in 2014 that would have turned the investment into 4.66 shares. A 20-for-one split would have made the investment a total of 93.20 shares in 2022.
The 93.20 shares would be worth $29,886.44 today, based on a price of $320.67 for Alphabet shares at the time of writing.
This represents a hypothetical return of 2,888.6% over nearly 20 years.
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