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To learn more, we invite Yorkville Ives partner Dan Ives and CNBC contributor Bryn Talkington. Thank you both for joining us. Dan, you believe that Alphabet is currently the best positioned among hyperscalers, and today is proof of that. Why do you think she's the best and what do you think she needs to do to prove it?
I think this sets the tone for the tech reporting season, because if you look at the cloud services numbers—growth of about 60%—this is a real success for Alphabet. Remember what happened a year ago. I think we are now seeing steady growth and how businesses are starting to actively monetize AI. And, of course, their achievements in the search engine and work on Gemini, despite delays in launch.
Listen, a year ago even New York taxi drivers were skeptical about Alphabet. And now, as MacKenzie noted, capital expenditures next year will exceed 300 billion, and this brings in more and more revenue. This sets the tone for Microsoft, Amazon, and later Meta, showing the transition from big spending to real monetization .
Yes, the taxi driver might have been skeptical, but not Berkshire Hathaway. So maybe it was a game changer for them. Brent, how do you assess the market's readiness to increase capital spending in today's report , given the profitability indicators? It looks like I'm sure Google will increase them again.
That is, they will receive 117 billion in income. These will be extremely strong numbers. Supporting Dan's optimism about Google, it's worth mentioning vertical integration: from AI and chips to YouTube, where they monetize advertising very effectively. I think GCP, Google's cloud platform, will continue to grow.
I think the growth estimate is around 25%. So, as AI develops, the cloud business will also accelerate. Here's what we have in the end. Therefore, in my opinion, the market is still ready to say: "You can spend." The stock rose about 10%. McKinsey said earlier, apparently, that this is about 13% below that almost $400 high.
But I think the numbers will be strong. The market will allow them to make capital expenditures because they have monetization not only through chips, but also, I think , through YouTube, search, Gemini, etc., and the cloud business, which is growing very quickly and helps with monetization. They are monetizing their current balance sheet very, very well.
So, cloud technologies, I think, estimates are somewhere in the mid-60s in terms of growth percentage? Unofficial forecasts are even higher than that. So, isn't the bar too high? These are huge numbers. These are huge numbers, but I think when it comes to the most important thing this reporting season, it 's the hyperscalers and what they're showing in terms of cloud growth.
Because it ultimately demonstrates enterprise use cases, even with the capacity limitations of what they do and what Kurian did at Google Cloud. I think that continues to be almost a benchmark for what others want to do, and that's what Wall Street is focused on. As Brent said, it all comes down to capital expenditure and monetization.
And I think tonight will really start to set the tone for what I continue to believe will be a very strong earnings season in the tech sector. In other words, return on investment. And there was a lot of investment, Brent. And I know you've been paying attention to this huge amount of debt and equity that has come into the market and has largely supported the development of AI infrastructure.
Do you feel like it's generally reaching a point of exhaustion? And is there anything in today's report that might indicate, you know, greater growth potential on that front or perhaps greater risks? Well, the market allows Google and other companies to continue issuing debt. I think the market will continue to -- the bond market will allow Google to issue debt for now, but I think there's a limit, and we'll start to see that in profitability, right?
The market, the bond market, will definitely feel it if it starts to, you know, get a little tired of all these issuances. But I think that's something I care about a lot because it was massive—not relative to the denominator of their market capitalization, but massive in the world of bond issuance.
From corporate, the corporate part of the technology, excuse me, the technology part of the corporate bond market is becoming, you know, significant, and we, we'll see how big the uptake is going to be. But for today everything is fine, but this is exactly what I pay attention to.
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