AI is Top Spending Priority for Half of Companies Surveyed

The AI revolution is truly well underway: Nearly half of companies (47%) surveyed by CNBC said AI is their top spending area in technology over the next 12 months.

Moreover, 63% of respondents said their companies are accelerating spending in AI compared to 37% that are proceeding with caution. Notably, no one said they were not investing in AI, according to a survey of about 100 executives in the CNBC Technology Executive Council.

The council consists of CIOs, CTOs, CDOs and other tech leaders from companies including Accenture, Adobe, Eli Lilly, Ernst & Young, IBM, Johnson & Johnson, Mattel, PwC, SAP, Tyson, Walmart and Zoom.

When asked what they considered as a critical tech strategy for their companies, AI came in second only to cloud – 58% vs. 63% − with machine learning coming in third at 53%.

Also, just under half said they believe AI will create more jobs while 26% said there will be a net loss of jobs. Another 26% said it is too soon to tell.

However, 53% of executives noted that tech spending has slowed down due to higher interest rates that could trigger a recession.

The survey was conducted between May 15 and June 20.

AI budgets

In a separate survey, sister research firm Omdia discovered that 55% of companies have a dedicated AI budget while 38% said spending on AI is supported by other budgets. Only 5% do not have a budget while 2% did not know, according to the "AI Budgets: Best Practices 2023" report.

“Substantive, dedicated AI budgets are clearly a trend,” according to the Omdia report. “This commitment reflects continued AI market maturity and indicates that many enterprises have progressed beyond PoCs (proofs of concept) and pilots into live, operationalized AI initiatives.”

Also, 44% of respondents said 70% of their AI budget goes to software, services and SaaS. Meanwhile, 20% said 70% of their AI budget goes to personnel and resources. About 36% said their budget is roughly evenly split between the two.

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Notably, companies in parts of Asia are spending more on AI than the West: 52% of respondents in Oceania, Eastern and Southeast Asia currently spend $1 million or more a year vs. 47% in western Europe and 38% in North America.

By vertical, financial services (62%) manufacturing (51%) and telecommunications (49%) are top spenders in AI. They are followed by health care and pharma (35%), retail and CPG (33%), energy, utilities, oil and gas (27%) and media and entertainment (24%).

Also, no use case dominates. Customer experience came in at 22.27%, followed by development tools at 20.95% and chatbots and virtual assistants at 20.89%.

The survey was conducted in February among 368 enterprises globally that are deploying AI. Among respondents, 47% said their companies have annual revenues of $250 million to $999 million while 31% have less than $250 million and the rest clocks in at $1 billion or more.

The respondents are fairly evenly split among industries: Financial services including insurance (18%), manufacturing (18%), retail and CPG (18%), health care and pharma (14%), telecom (13%), media and entertainment (10%) and energy, utilities, oil and gas (9%).

About a third are in North America, with 26% in Asia and Oceania, 25% in Western Europe, 6% in Latin America and the Caribbean, 4% in Africa, 4% in Eastern Europe and 2% in the Middle East.