Morgan Stanley surveyed a gaggle of CIOS to know the sources of AI price range. If hyperscalers deploy $100b in capex on AI this 12 months & legions of software program distributors hawk AI options, the cash to justify it should come from someplace.
41% of CIOs mentioned internet new spend. 35% mentioned present software program spend. Solely 6% mentioned it could come from skilled providers.
This final level raises the query about labor substitute : will AI siphon funds from labor budgets? Maybe the survey wasn’t designed to seize this nuance.
In comparison with 2023, these initially saying they wouldn’t spend money on AI are predominantly repurposing present software program spend.
Maybe the primary movers created devoted AI budgets & the second wave reallocates present software program spend.
A distinction may lie hidden within the figures : internet new software program spend for AI could also be earmarked for AI infrastructure to develop AI merchandise of their very own. Whereas repurposing present software program spend could also be for AI functions, shopping for off-the-shelf AI options.
Each of those modifications in spend would require some substantiation of return-on-investment.
Web new price range boots the AI trade if the productiveness positive factors are defensible. Repurposing of present spend implies larger competitors amongst a bigger set of rivals.
These internet flows on this tug-of-war decide the potential progress charges of the subsequent wave of software program startups.
