Alphabet's (GOOG)(GOOGL) unit YouTube is starting to run into a major ad issue. A week after running customer ads alongside racist videos, journalists are still easily finding objectionable videos with ads. The number of brands removing ads from the YouTube platform continues to mount. The question is what the impact will be to Alphabet after the stock has already taken a hit. Mark Mahaney suggests the YouTube ads were on target to generate $18.8 billion in sales this year. Analysts project the company topping $106 billion in total sales for 2017 with the majority of those sales coming from search related ads that aren't impacted by these issues at YouTube. Mahaney projected the impact as only $300 million with the potential of reaching $1 billion. The impact though is really a matter of how long it lasts and whether advertisers lose confidence in the process. The stock is already down from a recent all-time high of $874 to $835. The nearly $40 hit to the stock equates to nearly $28 billion from the market cap. The issue is starting to remind us of the problems faced by Baidu (BIDU) last year. A small problem with medical ads led to a complete updated advertiser verification problem. YouTube might be faced with a similar problem of needing to verify content that is solvable, but potentially a lengthy process to implement. At the end of the day, the system will be better a probably further separate Alphabet from the competition. The short term impact is unknown. My favorite play is to buy Baidu as the company is coming out of the verification process and headed back towards growth. Alphabet eventually hits $1,000, but the move is delayed for now. Disclosure: Long BIDU