It's not a hardware issue.
While I haven't had any problems with any other video sites, Youtube has been incredibly clunky on Safari. And the SOLUTION I found reveals the culpret.
Download and install the free Chrome browser by Google. Play any video on Youtube and difference is day and night. Not even a studder.
Why?
Beacause Google owns Youtube. And Google wants you to use their browser instead of Safari, Firefox or IE.
It's the same reason Apple is ditching their Google-based iPhone maps app for their own map app. It runs better on Android (also owned by Google) on purpose.
The best I can do is keep using Safari (still my favorite browser) and just copy paste to Chrome anytime there's a Youtube link.