By Tae Kim

This article is from the free weekly Barron's Tech email newsletter. Sign up here to get it delivered directly to your inbox.

Budget Shifts. Hi everyone. As we approach the holidays, corporate buyers are frantically prioritizing their technology spending plans for 2025.

I love reading Wall Street surveys of chief information officers at this time of year because they can point to potential shifts in market share and spending before they happen.

While OpenAI and Microsoft still receive the lion share of attention for their AI prowess, one recent CIO survey suggests a new company is rapidly gaining traction in the battle for AI enterprise spending -- Alphabet.

Piper Sandler's 2025 CIO survey, published late last week, asked 81 chief information officers how they're prioritizing budgets across different vendors and technology areas.

"IT spending optimism abounds as we turn the page on 2024," the Piper Sandler team wrote. "Gen AI [is] shifting from testing / planning to implementation and increasing spending intentions around cloud underpin what sets up to be a dynamic year for tech."

The analysts said that 87% of CIOs expect to increase IT budgets for 2025, the highest percentage in the survey's history, which goes back to at least 2020.

The prominence of Google Cloud rose significantly compared with the prior two surveys. It beat out Microsoft and OpenAI for the title of "most strategic" AI vendor, winning 27% of the "most strategic" responses versus 15% six months ago. It's a notable reversal for former leader Microsoft, whose votes declined from 33% to 24% in the same period.

Google Cloud also won the ranking for No. 1 AI infrastructure vendor when buyers were asked which cloud company they're planning to use to test or implement AI projects next year, with 50% saying Google Cloud.

Generally, it was still good news for the other major cloud-computing infrastructure vendors. The rising interest in AI applications and projects lifted the spending intentions for every vendor in the category versus six months ago, including Microsoft Azure, Amazon Web Services, Google Cloud Platform, and Oracle Cloud Infrastructure.

It bodes well for the parent companies of those cloud infrastructure players: Microsoft, Amazon, Alphabet, and Oracle.

Piper semiconductor analyst Harsh Kumar said the results are also favorable for Nvidia. All the cloud companies are big buyers of Nvidia's AI chips. According to the analyst, Nvidia has over 70% of the market for AI GPUs, or graphics processing units. Kumar estimates the overall AI chip market will become a $500 billion-plus opportunity by 2028.

If CIOs' budget plans come true, 2025 should be a promising year for AI. Investors may be taking note. Shares of Alphabet are up nearly 15% this month.

This Week in Barron's Tech

   -- Apple Pushes Out More AI Features, Including ChatGPT Integration 
 
   -- Oracle Stock Is Dropping. Why Wall Street Is OK With an Earnings Miss. 
 
   -- Micron Receives $6.2 Billion in Chips Act Funding 
 
   -- Palantir Stock Has a Sky-High Valuation. What History Says Happens Next. 
 
   -- Alibaba Stock Is Dropping as China Stimulus Rally Fades 

Write to Tae Kim at tae.kim@barrons.com or follow him on X at @firstadopter.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

December 11, 2024 17:02 ET (22:02 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.