Alphabet (GOOG) (GOOGL) has its sights set on becoming the world’s largest company and judging by the number of alphabets that are yet to be filled, or the respective companies that are yet to realize their full potential, then the company plan appears to be realistically achievable.

One of Alphabet’s companies is YouTube (coverring the letter “Y” of the alphabet). It’s been one of Alphabet’s most mysterious companies given the fact that it’s hard to really tell how much revenue and income it generates for the parent company.

Nonetheless, this has not deterred analysts from making their own projections and last year, UBS analyst Eric Sheridan made a remarkable claim that YouTube would be making $27 billion in revenues by the year 2020.

This came as shock give the obvious challenges that the YouTube has been facing over the last few years. Chief among the challenges is the fact that those using Android phones can now easily download YouTube videos and save them to watch later when offline. This results in a significant chunk of potential revenues being lost if the number of those using apps like YouTube downloader for Android is high enough.

Nonetheless, Sheridan’s estimates might yet be reliable given the fact that over the last two years, various publications have floated numbers that estimated YouTube’s 2015 revenues in the range of $8.5 billion to $9 billion. This compares to the year 2014’s estimate of about $4 billion and 2013’s $3 billion.

Now, taking these numbers at face value, this translates to a CAGR of about 75%. It’s obvious that it would be difficult to maintain that growth rate over a 5-7-year period. However, a 25% CAGR has been predicted by several analysts, and it seems more realistic going forward. If this is maintained for the next four years, it would put Sheridan’s 2020 revenue projection of about $27 billion well within reach.

By extrapolating 2015’s YouTube revenue of $9 billion to 2016, using the 25% CAGR, last year’s YouTube revenue would be estimated at about $11.25 billion. However, reports are already mooting  revenue in the region of $13 billion.

Still, this would barely be reflective of YouTube’s potential to become one Alphabet’s leading products for growth in the next few years. Alphabet is expected to generate revenues in the region of $90 billion for the year 2016, which would represent a growth of about 28.55% from the 2015 results. With a potential revenue of about $11 billion, YouTube would be barely cracking 12% share of revenues in the company’s business model.

Nonetheless, the age of smartphones may have brought about new challenges, but more importantly, it’s made it easy for people to access YouTube videos. Right now, there are more people who access the internet via smartphones than they are those who use web-based internet on PCs and Laptops.

As such, accessibility has been one of the driving forces behind YouTube’s soaring numbers, and with proper monetization, the platform could become one of Alphabet’s leading revenue generators.

Current reports already estimate that YouTube could be valued at about $110 billion, making it nearly twice as valuable as Netflix (:NFLX). This is despite the fact that Netflix’s profit potential trumps YouTube due to its superior business model.

Conclusion

In summary, YouTube boasts incredible numbers when assessing the company’s topline. It’s the most popular video streaming platform, attracting billions of views per day and more than one billion unique monthly users.

Since the introduction of mobile applications, the user base has gone a notch higher, but monetization is not as effective as it is on the web platform.

YouTube’s valuation could easily dwarf those of standalone video streaming services like Netflix if valued independently, but since Alphabet does not break down its revenues for the individual platforms, we will have to do with the estimates from notable analysts.

Nonetheless, the platform appears to have picked up some momentum on the topline, which could boost its parent company's growth.