AI Investments Surge: Half of Companies Prioritize AI Spending

0:00On today's podcast, I want to break down some really interesting data about AI. So we're going to talk about AI by the numbers. We were talking about what industries are implementing AI, what percentage of their budgets they're spending on AI, and what geographic locations are spending the most on AI. This is a really interesting topic. So without further ado, let's jump into it. So a lot of this data comes from a recent report or recent survey that was done by CNBC. And this survey was done from about 100 executives in the CNBC Technology Executive Council. And this council exists of CIOs, CTOs, CDOs, and other tech leaders from companies, including Accenture, Adobe, Eli Lilly, Ernest & Young, IBM, Johnson & Johnson, PWC, SAP, Tyson, Walmart, and Zoom.

0:47So big companies, big executives with important positions within these companies were all surveyed. And what was really interesting, the first little data that I want to bring up is the fact that nearly half of the companies, 47 % surveyed, said that AI is their top spending area in technology over the next 12 months. And one other piece of information that I think is really important when understanding the results of the survey is that this was done back in February. So shortly after ChatGPT launched, a lot of people were looking into it, but a lot of AI tools had not launched, had not been developed.

1:20You know, Google BARD wasn't even a thing. And I think that the more that these AI tools have accelerated and come out, if you had redone the survey today, I believe these numbers would be even higher. But, you know, nonetheless, the numbers are very interesting. And I think this gives us a really interesting look into kind of the headspace of some of these leaders of AI companies and what we can see in the future. So something that I found interesting was that 63 % of respondents said that their companies were accelerating spending in AI. 27 % are proceeding with caution this is back in February so that 37 % if they're not accelerating at the moment I think they're going to be left behind and so that's also if you're a new company trying to make it or trying to push and grow I think that is a very hopeful number if 37 % are proceeding with caution not jumping full in on AI they haven't caught the vision that leaves a lot of potential for you to really accelerate and beat out some of these slower incumbents, the old crusty companies.

2:22A lot of them, I feel like will be, you know, in changing their responses to accelerating by now, I would hope. But of course, there's a lot of people that just kind of resist change. And so there is a lot of opportunity when you see numbers like that. I think what's really notable is that no one said that they were not invested in AI, according to the survey of the 100 executives, all of them were currently and actively invested in it. And so when asked what they considered as a critical technology strategy for the companies, AI was like the second most important thing right behind cloud. So 58 % said that AI was critical and 63 % said that cloud was the most critical and machine learning came in third at about 53%.

3:06So just under half said they believe AI will create more jobs and about 27 % said that there's going to be a net loss of jobs. About 27 % said that it's too soon to tell. And And this is interesting getting a statistic like this out of this group of people who obviously are in charge of a lot of people. So if 26 % are saying it's going to be a net loss in jobs, you know, you could assume that 26 % is also in charge of firing a lot of people. And they themselves see the need or essentially the direction that they are themselves going to let go of a lot of jobs. So I think that's an interesting space.

3:42But, you know, just under half, so more than are letting them go, said they believe AI is going to create more jobs, which is interesting because, you know, overall the net, like if we, of course, is anecdotal. Of course, this is not relatively anecdotal. This is 100 executives. But, you know, if we took that as representative of the market or the economy in general with, you know, almost half of them saying they're going to hire more people and 26 % say they're going to fire people to let the AI do it. But there's going to be a net gain in jobs. And this is kind of where I actually see AI, see all innovations creating more jobs.

4:18They create more prosperity and more automation. And so I just see it as kind of lifting the global standard of living. 26 % in that same study also said it's too soon to tell. So it would be interesting to resurvey them today. About 53 % of the executives noted that tech spending has slowed due to higher interest rates. And they believe that that could possibly trigger a recession, which is interesting. that's over half of them are, you know, tech spending has slowed, but they're all spending more on AI. Meaning if you are a tech company and you are not incorporating AI into your products and into your services, you are going to be seeing dwindling sales while people that are really at the forefront of AI, you know, NVIDIA or other people that are really interfacing with AI and in that space are seeing record sales.

5:03Okay, a really quick update on this podcast episode, I feel like I need to say, I think earlier I said this was done in February. This survey was actually conducted between May 15th and June 20th. So this is actually very recent data, not perhaps the most recent data, right, if you got some of these responses in May, but very recent data if the survey just closed, you know, at the end of last month. So that's just a little caveat I wanted to throw in here for the episode. In any case, as far as AI budgets goes in a separate survey that was done by a firm omdia they discovered that 55 of the companies have a dedicated ai budget while 38 said spending on ai is supported by other budgets so only five percent do not have a budget and two percent did not know according to the ai budget best practices report so in a quote they said um and this is according to the om dia report substantive substantive dedicated ai budgets are clearly a trend this commitment reflects continued ai market maturity and indicates that many enterprises have progressed beyond pocs proof of concepts and pilots into live operational ai initiatives so about 44 of respondents said that 70 of their AI budget goes to software, services, and SaaS.

6:24And then only 20 % actually said that 70 % of their budget goes to personnel and resources. But I think this is really interesting, you know, only 20%, but at the same time, that's actually a pretty significant number if they're talking about 70 % of their budget. So, and I think the big difference here is, you know, some companies are investing in software and SaaS where they may not have the in-house personnel to run a lot of these AI systems, but 20 % evidently are hiring personnel and resources, aka, you know, NVIDIA H100 graphics cards and, you know, personnel to run them and train their own AI models.

7:01So I believe that the people spending 70 % of their budget on personnel are people that are doing a lot more, you know, in-house, in-depth, actual AI model training. About 36 % said their budget is roughly evenly split between the two. So I think what's really interesting when we're looking at this from a geographic perspective, companies in parts of Asia apparently are spending more than AI, spending more on AI than the West is. About 52 % of respondents in Oceania, Eastern, and Southern Asia are currently spending a million dollars or more a year. And contrasting that 52 % to Western Europe's 47 % and 38 % in North America that are spending over a million dollars.

7:44I find that very, very interesting that Asia has this bigger investment. Europe even has a bigger investment in North America on AI at the moment. If you're looking at it, I mean, and that's not that the total number is greater, but on average, the companies from those areas are spending more or more companies from those areas are. so by vertical i want to talk about which verticals and which niches are using ai the most and how their you know budgets are divided so if we're looking at it by vertical financial services is spending 62 percent of their budget on ai and they're followed relatively close behind by manufacturing that's spending 51 percent telecommunications spending 49 percent those are all the top spenders.

8:33Then if you go down the line a little bit, healthcare and pharma is spending 35%, retail and CPG is spending 33%, energy, utilities, oil, and gas is spending 27%, media and entertainment coming in at 24%. It's kind of interesting looking at these different industries and noticing that some of them are like media and entertainment where you could theoretically envision a lot of really powerful AI use cases, whether that's for script writing or you know generating assets for movies and all sorts of things that they're spending you know less than financial services now of course financial services has a lot to gain you create an ai model that can predict different stock market trends there's a lot of upside so you can definitely see why they are going so heavily 62 is pretty impressive um but still i am you know curious why some of these other industries aren't spending more so i think um you know So if we're looking at what use cases are being used, I would say there isn't one in particular that really dominates.

9:31But here's some of the most popular ones. Customer experience is at 22 % of what they're using this for, followed by development tools, which is 20.9%, and chatbot and virtual assistants at 20.8%. So honestly, all of those are virtually the same, you know, hovering between 22.2 and 20.8. So very, very similar use cases for our amount of people using these things for customer experience, developer tools and virtual assistance. But there's there are a number of, you know, other areas. I think the question was asked, how is the AI budget divided by use case device monitoring and control had 19 percent chatbots?

10:15was 20%. Customer experience, like we mentioned, was 22%. Predictive analysis was 17%. Voice and speech recognition was 15%. Development tools, we mentioned this before, was 20%. Text analysis and generation is 14%. This is really interesting to me because text analysis and generation, like Chai GPT is text generation, is only 14%. But I guess that might kind of get cut into other areas like they did have a special a specific chatbot virtual assistant category so perhaps if you're just doing exclusive text generation you know they're probably more talking about like writing articles and analyzing text so okay that makes sense from having that at 14 percent in any case process optimization was 17 quality monitoring was 17 visual analytics is you know 18 are using ai for visual analytics and anomaly detection was actually a very very high with 19.5 % of people using AI for anomaly detection as their use case.

11:18So that particular survey was conducted back in February. That's why I got confused discussing the earlier survey by CNBC that ended in June. But this particular survey talking about the different AI use cases, that one specifically happened in February. And that was with 368 enterprises around the world that are deploying AI. And among those, about 47 % said their companies have annual revenues of 25 to 99 million, 30 % have less than$250 million, and the rest are above a billion dollars. So the respondents are also pretty evenly split into different categories. And about a third are in North America, 26 % in Asia, 25 % in Western Europe, 6 % in Latin America, the Caribbean, and some other areas that had less.

12:07But overall, I think this data is super, super interesting. I think this gives us a lot of insights into who's using AI, what they're using AI for, how we're seeing the AI landscape develop, and kind of where these companies see AI going into the future. So based off of this data, it'll be interesting to follow and see follow-up surveys and see if things have changed.