JPMorgan executive explains why decarbonization is a megatrend that business can’t ignore
Rama Variankaval, global head of the center for carbon transition for JP Morgan Securities LLC, speaks during the Aspen Ideas: Climate conference in Miami Beach, Florida, US, on Thursday, March, 9, 2023. Aspen Ideas: Climate is a solutions-focused event designed for the public to interact with and learn from climate leaders whose ideas and actions are critical to address our collective future.
Bloomberg | Bloomberg | Getty Images
Rama Variankaval is in his twentieth year working at JPMorgan Chase and at the end of 2020, he expanded his role in the corporate finance advisory arm of the bank to help spearhead the bank’s strategy on decarbonization, which refers to reducing or eliminating carbon dioxide emissions from a system or process.
He believes that decarbonization is a megatrend for the global financial markets, much like digitization has been for the last few decades.
“At any point in time, there are certain megatrends that impact more than just a narrow part of the economy,” Variankaval told CNBC in a video interview earlier in August. In his career at JPMorgan, Variankaval’s mission has been to identify and have a viewpoint on what those megatrends are and then to “direct our energies, our efforts, our balance sheets, to align with those megatrends.”
He believes decarbonization is a megatrend because global regulations to reduce greenhouse gas emissions will touch every business in every part of the world.
“It doesn’t matter whether you’re an energy client, or a consumer products client, or a retail client, there is something about this megatrend that is going to impact your business model, your business,” Variankaval told CNBC.
JPMorgan is looking be a big lender in the sector. The bank has said it is aiming to finance more than $2.5 trillion in the coming decade to advance climate and sustainable development goals.
Megatrend started around 2020
The topic of ESG investing — which stands for environmental, social, and corporate governance and is describes an investing strategy which incorporates non-financial measures of responsibilities — started coming up in 2018 “quite frequently,” Variankaval told CNBC. The focus on ESG was a harbinger of the forthcoming and increasingly intense focus on climate.
Climate change has been an issue for much longer than decarbonization has been a global financial megatrend, but a number of factors coincided to make decarbonization a business imperative.
The Paris Climate Agreement, adopted by 196 parties at the United Nations Climate Change Conference in Paris in 2015, was “a fairly massive catalyst,” Variankaval said.
By 2020, large asset owners, like pension funds and sovereign wealth funds, started to prioritize decarbonization “with higher intensity,” says Variankaval.
As the largest asset owners started to prioritize decarbonization, their influence trickled down and influenced the behavior of other financial gate keepers. Asset managers started asking the companies where they were making investments to start focusing resources and operations on decarbonization. For publicly traded companies, that pressure came in the form of proxy votes on issues relating to decarbonization.
In 2020, JPMorgan formally announced its Center for Carbon Transition, a group responsible for designing and implementing the JPMorgan strategy around climate and sustainability as it pertains to its client-facing businesses, and to also engage with those companies about that strategy “because we felt everyone was thinking about these topics” at the same time, Variankaval told CNBC.
President Joe Biden signs The Inflation Reduction Act with (left to right) Sen. Joe Manchin, D-WV; Senate Majority Leader Chuck Schumer, D-NY; House Majority Whip James Clyburn, D-SC; Rep. Frank Pallone, D-NJ; and Rep. Kathy Catsor, D-FL, at the White House on Aug. 16, 2022.
Drew Angerer | Getty Images News | Getty Images
The Biden administration’s landmark climate bill, the Inflation Reduction Act, signed in August 2022, further established the megatrend, accelerating the flow of capital into decarbonization and low-carbon technologies like solar, wind, green hydrogen, sustainable aviation fuel, carbon capture, and other areas.
The IRA lowered the net cost of capital for these decarbonization technology companies by as much as 5% (500 basis points), according to Variankaval, because it made it cheaper for decarbonization companies to put together their capital stack, or financing for deals. Deals that were typically done with a combination of debt and equity got a third source of capital added to the mix: Tax credits and the associated tax equity.
The IRA happened just as the broader economy simultaneously slowed down because the Federal Reserve raised interest rates to combat rising inflation. The higher interest rates in the broader economy counteracted some of the incentives of the IRA, but even against the backdrop of a softening broader economy, the IRA has already turbocharged the sector. By JPMorgan’s count, more than $100 billion of investments have been announced in just the last year with a direct link to the IRA, says Variankaval.
Also, there’s about $50 billion a year going into climate tech companies via private funding and venture capital funding pathways, says Variankaval.
“We see massive amounts of capital formation happening around the climate theme, or around the decarbonization theme, and we absolutely want to be the bank that is a leader in helping our clients navigate that, whether they are small clients or big clients,” Variankaval told CNBC.
While the IRA is specific to the United states, companies and governments are re-evaluating their own industrial policies around the globe to focus more on resiliency than they previously have, says Variankaval.
“We went, I think, a period of 15, 20, 30 years, where efficiency was the number one guiding principle of how you organize yourself,” Variankaval told CNBC. The thinking was: “let’s find the cheapest place to do every part of our supply chain, and stitch it all together,” Variankaval said.
But now, the resiliency of a company’s supply chain is being given as much priority as efficiency. And sustainability is a keystone of resiliency.
In addition to a sharpening global focus on decarbonization, the Covid-19 pandemic brought a particularly strong spotlight on the importance of supply chains, their vulnerability, and the importance of focusing on resiliency in supply chain management.
“All of these are coming together in a way to, I think, be perhaps the largest change in how capital flows that at least I have seen in my lifetime,” Variankaval told CNBC.
It’s too soon to be picking winners and losers
In addition to helping its clients adapt to a decarbonizing economy, JPMorgan also sees opportunity in being the bank for the burgeoning and potentially high-growth sector of climate tech companies.
“We absolutely want to be there with them at the ground level, and then have these companies grow with us. We want to be the bank of their choice,” Variankaval said.
Right now, Variankaval says, it’s too soon to know exactly which climate tech companies are going to the winners and losers.
“In a more traditional way of bringing about changes, a lot of research gets done in academic labs and government labs, and then people take it out and test it out in the commercial setting, and figure out what works, what doesn’t work. It’s a multi decade-long process,” Variankaval told CNBC.
It took two decades for the Internet from invention to wide business adoption, but “we don’t have the luxury of time when it comes to climate tech to go through the long-run process,” Variankaval said.
In some segments of climate tech, there are debates about which solutions are better than others that take on a near religious fervor. That’s not particularly helpful in his view.
“We have to deploy capital across all likely solutions, knowing that some may not really work as promised and the use cases may not quite be what we think they could be today. But others might surprises. And some might kick into action sooner, some might just take longer to kick into action. So you need to diversify in terms of technologies, but also in time horizons,” Variankaval told CNBC.
“You can’t really pick winners and losers at this point. We’re just too early. And that is at least how we think about it.”
Sundar Pichai, chief executive officer of Alphabet Inc., during a visit to the Google for Startups campus in Warsaw, Poland, on Thursday, Feb. 13, 2025. The EU has established a reputation globally for its aggressive regulation of major technology companies, including the likes of Apple and Google over antitrust concerns. Photographer: Damian Lemanski/Bloomberg via Getty Images
Damian Lemanski | Bloomberg | Getty Images
Perplexity AI’s bid on Tuesday to buy Google’s Chrome browser for $34.5 billion represents a dramatic moment for the internet search giant, a week before it celebrates the 20th anniversary of its IPO.
Even if analysts aren’t taking the offer very seriously, Perplexity’s move marks a turning point. It’s the first time an outside party has made such a public and specific effort to strip out a key piece of Google, which is currently awaiting a judge’s decision on whether it must take significant divestiture steps following a ruling last year that the company has held a monopoly in its core search market.
The ruling was widely viewed as the most important antitrust decision in the tech industry since the case against Microsoft more than two decades ago. The U.S. Department of Justice, which filed the landmark case against Google in 2020, indicated after its victory in court that it was considering a possible breakup of Google as an antitrust remedy.
Soon after that, the DOJ explicitly called for Google to divest Chrome to create a more equal playing field for search competitors. As is, Google bundles search and other services into Chrome and preinstalls the browser on Chromebooks. Google Legal Chief Kent Walker said in response to the DOJ that its “approach would result in unprecedented government overreach” and would harm the country’s effort to maintain economic and tech leadership.
With the remedies decision expected this month, investors have a lot to consider regarding the future value of Google and parent Alphabet. The company is shelling out tens of billions of dollars a year on artificial intelligence infrastructure and AI services while facing the risk that consumers will be spending a lot less time on traditional search as ChatGPT and other AI-powered alternatives provide new ways to access information.
But while Alphabet still counts on search-related ads for the majority of its revenue, the company has been diversifying over the past decade. October will mark 10 years since the creation of Alphabet as a holding company, with Google as its prime subsidiary.
“This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google,” co-founder Larry Page said in a blog post at the time.
Page moved from CEO of Google to become chief executive of Alphabet, promoting Sundar Pichai, who had been a senior vice president in charge of internet businesses, to run Google. Four years later, Pichai replaced Page as Alphabet CEO.
On Pichai’s watch, Alphabet’s market cap has jumped more than 150% to $2.5 trillion. With an increasingly dominant position on the internet, Pichai and team have had to continue looking for growth areas, particularly in AI, while simultaneously fending off an aggressive set of regulators in the U.S. and Europe.
Analysts have taken the opportunity to place estimated values on Alphabet’s various businesses, partly in the event that the company is ever forced into drastic measures. Some have even suggested it could be a good thing for shareholders.
“We believe the only way forward for Alphabet is a complete breakup that would allow investors to own the business they actually want,” analysts at D.A. Davidson have written in a series of notes this year.
Alphabet didn’t respond to a request for comment.
Here’s a breakdown of how some analysts value Alphabet’s top non-search assets:
Chrome
The browser is key to Alphabet’s ad business, which uses data from Chrome to help with targeted advertisements. Google originally launched Chrome in 2008 as an effort to “add value for users and, at the same time, help drive innovation on the web.”
Perplexity’s offer doesn’t stack up to analyst estimates, but it’s still much higher than Perplexity’s own valuation, which reached $18 billion in July. Perplexity, which is best known for its AI-powered search engine that gives users simple answers to inquiries, said investors are on board to foot the bill. However, the company didn’t name the prospective backers.
Barclays analysts called the possibility of a Chrome divestiture a “black swan” risk, warning of a potential 15% to 25% drop in Alphabet’s stock should it occur. They estimate that Chrome drives around 35% of Google’s search revenue.
If a deal for Chrome is on the table, analysts at Raymond James value the browser at $50 billion, based on 2.25 billion users and Google’s revenue share agreements with phone manufacturers that preinstall Chrome on devices.
That’s inline with where Gabriel Weinberg, CEO of rival search company DuckDuckGo, values Chrome. Weinberg, who testified in the antitrust trial, said in April that Chrome could be sold for up to $50 billion if a spinout was required. Weinberg said his estimate was based on “back-of-the-envelope” math, looking at Chrome’s user base.
Bob O’Donnell of market research firm TECHnalysis Research, cautioned that Chrome is “not directly monetizable,” because it serves as a gateway and that it’s “not clear how you measure that from a pure revenue-generating perspective.”
Google Cloud
A person takes a photo of the Google Cloud logo, during the 2025 Mobile World Congress (MWC) in Barcelona, Spain, March 4, 2025.
Albert Gea | Reuters
Google’s cloud unit, which is third in the cloud infrastructure market behind Amazon Web Services and Microsoft Azure, is one of Alphabet’s key growth engines and its biggest business outside of digital advertising.
Google began its big push into the market about a decade ago, even though it officially launched what was called the Google Cloud Platform (GCP) in 2011. The unit was rebranded as just Google Cloud in 2016.
Like AWS and Azure, Google Cloud generates revenue from businesses ranging from startups to large enterprises that run workloads on the company’s servers. Additionally, customers pay for products like Google Workspace, the company’s suite of productivity apps and collaboration tools.
In 2020, Google began breaking out its cloud business in financial statements, starting with revenue. In the fourth quarter of 2020, the first time Google included profit metrics for the unit, it recorded an operating loss of $1.24 billion.
The business turned profitable in 2023, and is now generating healthy margins. In the second quarter of 2025, Google reported an operating profit for the cloud business of $2.8 billion on revenue of $13.6 billion. Demand is so high that the company’s cloud services now have a backlog, a measure of future committed revenue, of $106 billion, CFO Anat Ashkenazi said on the earnings call.
In March, Google agreed to acquire cloud security vendor Wiz for $32 billion, the company’s largest deal ever.
Analysts at Wedbush Securities value Google’s cloud at $602 billion, while TD Cowen in May put the number at about $549 billion. For Raymond James, the valuation is $579 billion.
D.A. Davidson analysts, who have the highest ascribed valuation at $682 billion, and TD Cowen analysts note that while Google still trails AWS and Azure, it’s growing faster than Amazon’s cloud business and has the potential for a premium valuation. That’s based on its AI infrastructure, strong data analytics stack, and ability to capture more enterprise business.
It would be “one of the best standalone software stocks,” D.A. Davidson analysts wrote in July.
YouTube
A Youtube podcast microphone is seen at the Variety Podcasting Brunch Presented By YouTube at Austin Proper Hotel in Austin, Texas, on March 8, 2025.
Mat Hayward | Variety | Getty Images
Google’s $1.65 billion purchase of YouTube in 2006 is generally viewed as one of the best acquisitions ever by an internet company, alongside Facebook’s $1 billion deal for Instagram in 2012.
YouTube is the largest video site on the web and a big part of Google’s ad business. In the second quarter, YouTube ad revenue increased 13% to $9.8 billion, accounting for 14% of Google’s total ad sales.
Valuation estimates vary tremendously.
Dubbing it the “new king of all media,” MoffettNathanson values YouTube at between $475 billion and $550 billion, arguing that it’s larger and more powerful than any other player in Hollywood. At the top end of that range, YouTube would be worth about 22% of all of Alphabet.
YouTube recently overtook Netflix, which has a market cap of $515 billion, as the top streaming platform in terms of audience engagement.
TD Cowen analysts ascribe a much lower valuation at $271 billion. The firm notes that it’s one of six Google products with more than 2 billion monthly users, along with search, Google Maps, Gmail, Android and Chrome. Raymond James says YouTube is worth $306 billion.
For 2024, YouTube was the second-largest media company by revenue at $54.2 billion, trailing only Disney. The platform earns revenue from advertising and subscriptions.
The TD Cowen analysts said in May that they expect ad revenue to climb about 14% this year, and they expect the unit to maintain a double-digit growth rate. There’s also a fast-growing subscription side that includes YouTube TV, music and NFL Sunday ticket.
Waymo
Alphabet’s self-driving car company, Waymo, is by far its most high-profile success so far outside of Google.
Waymo currently operates the largest commercial autonomous ride-hailing fleet in the U.S., with more than 1,500 cars and over 100 million fully driverless miles logged. Rivals like Tesla and Amazon’s Zoox are still mostly at the testing phase in limited markets.
When Alphabet was formed as Google’s parent company, it created an “Other Bets” category to include businesses that it liked to call “moonshots,” a term that had already made its way into Google lexicon.
“We won’t become complacent, relying solely on small tweaks as the years wear on,” the company wrote in its 2014 annual report, describing its moonshot projects.
Waymo was spun out of Google in 2016 to join Other Bets, which on the whole is still losing billions of dollars a year. In the second quarter, Alphabet recorded a loss for the category of $1.2 billion on $373 million in revenue.
In its most recent funding round in November, Waymo was valued at $45 billion. The transaction included outside investors Andreessen Horowitz, Tiger Global, Silver Lake, Fidelity and T. Rowe Price.
Some analysts see the unit worth many multiples of that now. D.A. Davidson analysts estimated the valuation at $200 billion or more earlier this month. Oppenheimer assigned a base case valuation of $300 billion, on the assumption that it generates $102 billion in adjusted earnings by 2040.
Raymond James values Waymo at $150 billion, with a prediction that rides per week will reach 1.4 million in 2027 and climb to 5.8 million by 2030. TD Cowen estimated Waymo’s enterprise mid-point value at $60 billion.
Waymo says it now conducts more than 250,000 paid weekly trips in the markets where it operates commercially, including Atlanta, Austin, Los Angeles, Phoenix and San Francisco. The company said it would be expanding to Philadelphia, Dallas and elsewhere.
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Cisco CEO Chuck Robbins speaks at the Business Roundtable CEO Workforce Forum in Washington on June 17, 2025.
Al Drago | Bloomberg | Getty Images
CIsco reported results on Wednesday that narrowly exceeded analysts’ expectations and issued quarterly guidance that was also better than expected. The stock slipped in extended trading.
Here’s how the company did in comparison with LSEG consensus:
- Earnings per share: 99 cents adjusted vs. 98 cents expected
- Revenue: $14.67 billion vs. $14.62 billion expected
Revenue increased 7.6% year over year in the quarter, which ended on July 26, according to a statement. Net income rose to $2.82 billion, or 71 cents per share, from $2.16 billion, or 54 cents per share, in the same quarter a year ago.
Management called for 97 cents to 99 cents in fiscal firsœt-quarter adjusted earnings per share on $14.65 billion to $14.85 billion in revenue. Analysts surveyed by LSEG were expecting 97 cents per share on $14.62 billion in revenue.
For the full 2026 fiscal year, Cisco forecast $4 to $4.06 in adjusted earnings per share and $59 billion to $60 billion in revenue. The LSEG consensus was for earnings of $4.03 a share and $59.53 billion in revenue.
“While we have some clarity on tariffs, we are still operating in a complex environment,” Mark Patterson, Cisco’s finance chief, said on a conference call with analysts.
In the fiscal fourth quarter, Cisco generated $7.63 billion in networking revenue, up 12%. Analysts polled by StreetAccount were looking for $7.34 billion.
Cisco’s security revenue for the quarter totaled $1.95 billion, up 9% and trailing the StreetAccount estimate of $2.11 billion.
During the quarter, Cisco said it would collaborate with a partnership to invest in artificial intelligence infrastructure, alongside BlackRock, Microsoft and other companies. It joined a Stargate data center initiative for the Middle East that involves OpenAI and SoftBank. And the company introduced switches and routers that can take on AI workloads.
AI infrastructure orders from web companies in the quarter reached $800 million, Cisco CEO Chuck Robbins said on the call. The total for the 2025 fiscal year was over $2 billion, more than double the company’s goal, he said.
Cisco’s AI infrastructure sales pipeline from enterprises is in the hundreds of billions of dollars, Robbins said.
At market close on Wednesday, Cisco shares are up 19% in 2025, while the S&P 500 has gained about 10%.
This is breaking news. Please check back for updates.
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CoreWeave‘s stock dropped 14% after the renter of artificial intelligence data centers reported a bigger-than-expected loss.
In its second quarterly financial results as a public company, CoreWeave reported an adjusted loss of 27 cents per share, compared to a 21-cent loss per share expected by analysts polled by LSEG.
CoreWeave’s results came as the lock-up period following its initial public offering is set to expire Thursday evening and potentially add volatility to shares. The term refers to a set period of time following a market debut when insiders are restricted from selling shares.
“We remain constructive long term and are encouraged by today’s data points, but see near-term upside capped by the potential CORZ related dilution and uncertainty, and the pending lock-up expiration on Thursday,” wrote analysts at Stifel, referencing the recent acquisition of Core Scientific.
Shares of Core Scientific fell 7% Wednesday.
In the current quarter, the company projects $1.26 billion to $1.30 billion in revenue. Analysts polled by LSEG forecasted $1.25 billion. CoreWeave also lifted 2025 revenue guidance to between $5.15 billion and $5.35, up from a $4.9 billion to $5.1 billion forecast provided in May and above a $5.05 billion estimate.
Some analysts were hoping for stronger guidance given the stock’s massive surge since going public in March. Others highlighted light capital expenditures guidance and a delay in some spending until the fourth quarter as a potential point of weakness.
“This delay in capex highlights the uncertainty around deployment time; as go-live timing is pushed, in-period revenue recognition will be smaller,” wrote analysts at Morgan Stanley.
The AI infrastructure provider said revenue more than tripled from a year ago to $1.21 billion as it continues to benefit from surging AI demand. That also surpassed a $1.08 billion forecast from Wall Street. Finance chief Nitin Agrawal also said during a call with analysts that demand outweighs supply.
The New Jersey-based company, whose customers include OpenAI, Microsoft and Nvidia, also said it has recently signed expansion deals with hyperscale customers.
CoreWeave acquired AI model monitoring startup Weights and Biases for $1.4 billion during the period and said it finished the quarter with a $30.1 billion revenue backlog.
Coreweave stock 6-month chart.
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