Google gains billions as YouTube drives ad growth

Google's shares hit a record high of $703, valuing the company at $471.50 bn and cementing its position as the world's second most valuable company

Google Inc's shares soared as much as 16.8 per cent on Friday, crossing the $700 mark and adding nearly $68 billion to its market value, as strong growth in YouTube viewership allayed concerns about Facebook Inc's push into video.

The stock's surge, which sent the Nasdaq composite index to a record intraday high, came a day after Google reported better-than-expected profit for the first time in six quarters.

The rise in the web search giant's market value was more than the total market capitalisation of Caterpillar Inc, the world's biggest construction equipment maker.

Google's shares hit a record high of $703, valuing the company at $471.50 billion and cementing its position as the world's second most valuable company after Apple Inc.

At least 27 brokerages raised their price targets on Google's stock by as much as $150 to as high as $800, with analysts also welcoming new Chief Financial Officer Ruth Porat's emphasis on disciplined spending.

At the highest price target, Google would be valued at $545 billion. Apple is valued at about $740 billion.

Google said on Thursday that watch time for YouTube rose 60 per cent in the second quarter and the video service had more viewers aged 18-49 on mobile alone than any US cable network.

Online video ads could be a $17 billion opportunity in the United States alone by 2017, Jefferies & Co analysts wrote in a note, and YouTube looks best positioned to benefit.

Google's advertising revenue rose 11 per cent to $16.02 billion in the second quarter. The number of paid clicks increased 18 per cent.