Sure, if Alphabet (ticker: GOOGL), were to spin off YouTube and Google Cloud it would be easier for Wall Street to value the component parts. However, I’m not sure that YouTube or Google Cloud ought to spin-off. Here’s why:
Google Cloud: Google Cloud consists of Google Cloud Platform (GCP is the comp to AWS and Azure) and Google Workspace. GCP is in growth mode and will require heavy investment – particularly in its partner network – to compete with AWS and Azure. I am not sure what the cost allocation to GCP is in terms of the expenses associated with machine learning/advanced analytics/AI, but I would like to see GCP become profitable before being spun off. Otherwise, it will require regular cash infusions from Alphabet/Google and it is more tax efficient for Alphabet/Google to make those investments while Google Cloud is under the Alphabet/Google umbrella. Once Google Cloud steps outside of Alphabet/Google, any cash infusions from the parent company would likely be taxable.
YouTube: YouTube is mature enough to survive on its own as a separately-traded company. However, I’m not sure what Alphabet’s content strategy is. Would Alphabet ever consider making a run to acquire WarnerBros Discovery (ticker: WBD) or Disney (ticker: DIS)? If so, it’s better for YouTube to remain in-house and spin-off post deal with the new leadership team. If not, now is as good a time as any to spin off YouTube.