AI spending takes up 10% of IT budgets of big tech firms: research

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New research from Wedbush reveals that global technology companies’ spending on artificial intelligence (AI) is set to reach new all-time highs as the race for supremacy heats up.

According to the report, big tech firms are on course to allocate up to 10% of their annual budget to AI in the coming years, making a significant leap from previous years. AI spending remained under 1% for several large technology companies in 2023, but new use cases are forcing the hands of industry giants.

Wedbush analysts say the double-digit increase in budgetary allocation to AI by technology giants could happen before the end of the decade. Conservative estimates peg 2028 as a tentative date for AI spending to reach the 10% mark, buoyed by rapid innovation and wide-scale adoption.

“While the first wave of the AI Revolution is being led by the Godfather of AI Jensen and Nvidia along with Nadella/Redmond … now the 2nd/3rd/4th derivatives of this $1 trillion of spending over the next decade is hitting the shores of the tech sector,” read the Wedbush report.

The report points to an upward trajectory of AI budgetary spending by frontline technology firms in recent months. Industry leaders like Meta (NASDAQ: META), Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL), and Google (NASDAQ: GOOGL) are breaking the bank to seize a lion’s share of the industry with rapid-fire releases for their large language models (LLMs).

Apart from software rollouts, frontline tech companies are splurging on the infrastructure and employee training. Microsoft has been leading the charge in this regard by earmarking billions for data hubs across the globe while Apple and Google are toeing the path of partnerships and acquisitions.

Wedbush’s report notes that the heightened interest is spilling over to other technology firms watching from the sidelines and seeking to get skin in the game. Firms like Salesforce (NASDAQ: CRM), MongoDB (NASDAQ: MDB), and Snowflakes (NASDAQ: SNOW) are steadily increasing the size of their AI bets, a move that could push the cumulative value of the AI software ecosystem to nearly $300 billion by 2027.

“We are seeing more breadcrumbs on the unprecedented AI spending wave from Arm Holdings, Palantir, Oracle and others which has reinforced this enterprise AI spending cycle,” read the report.

Executives bracing for AI impact

Across the board, a significant number of CEOs have unveiled strategies to integrate AI into their existing operations to improve efficiency and productivity. While some CEOs are opting for partnerships, others are keen on building their solutions from scratch, but all sides of the divide have their eyes on the cost implications and security of the choices.

For CIOs, questions surrounding the return on investments (ROI) continue to stand in the way of AI adoption, with 42% of respondents confirming that enterprises may not make a profit on their AI investments for up to three years. This is in stark contrast with investments in blockchain technology that offer firms a shorter window to make decent ROIs.

In order for artificial intelligence (AI) to work right within the law and thrive in the face of growing challenges, it needs to integrate an enterprise blockchain system that ensures data input quality and ownership—allowing it to keep data safe while also guaranteeing the immutability of data. Check out CoinGeek’s coverage on this emerging tech to learn more why Enterprise blockchain will be the backbone of AI.

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