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Report: AI Will Take Up 10% of Big Tech IT Budgets

Artificial intelligence (AI) projects are set to comprise up to 10% of companies’ IT budgets.

That’s according to a report Sunday (May 12) by Seeking Alpha, citing research by Wedbush. As the report notes, it’s a dramatic jump in AI spending, which last year accounted for under 1% of IT spending.

“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,” a Wedbush note said.

“We are seeing more breadcrumbs on the unprecedented AI spending wave from Arm HoldingsPalantirOracle and others which has reinforced this enterprise AI spending cycle,” the Wedbush report added.

The findings come as tech giants such as Meta, Apple and Microsoft are investing heavily in AI projects. For example, Meta last week unveiled new generative AI tools that let businesses create images for ads, while Microsoft recently expanded its AI-assistant-focused partnership with ServiceNow.

“We strongly view this as Microsoft’s ‘iPhone Moment’ with AI set to change the cloud growth trajectory in Redmond the next few years, and our recent checks giving further confidence in this dynamic,” Wedbush added.

Last week also saw the announcement of Microsoft’s planned $3.3 billion data hub in Wisconsin designed to teach employees and manufacturers to optimize AI use. It’s part of a growing wave of large-scale investments in AI infrastructure and training. 

“Assuming the infrastructure gets built, companies would have access to more advanced AI capabilities,” tech analyst Vaclav Vincalek told PYMNTS. “For example, more sophisticated machine learning algorithms can help analyze larger and larger datasets in shorter time frames. Or improved natural language processing to actually better serve customers with AI.”

Meanwhile, PYMNTS last week examined New York’s efforts to compete with San Francisco and Seattle as a go-to destination for cutting-edge technology such as AI.

“If New York learns how to attract engineering AI talent faster than the Bay Area and retain that talent more effectively, then communities will be formed where engineers and entrepreneurs passionate about AI can interact, share ideas, learn from each other and drive innovation forward,” Egor Olteanu, co-founder and CEO at Volt AI, said in an interview with PYMNTS. 

“Silicon Valley is a beautiful place between an ocean and mountains with near-perfect California weather — what is New York willing to do to attract talent and keep them there instead?”

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