Microsoft Is Big Winner as Corporate Tech Spending Shifts to AI – Barron’s

Piper Sandlers latest survey of corporate technology buyers shows overall spending outlooks have softened. But there are also changes in budget priorities with a clear winner: artificial intelligence applications.

Microsoft ticker: MSFT) will be a big beneficiary of the move toward AI as companies stated a higher intention to use more of its cloud-computing services, Piper analyst Brent Bracelin said. He has an Overweight rating for Microsoft stock and a $400 price target.

On Wednesday, the investment bank published a report after asking 147 chief information officers, or CIOs, which areas they intend to spend more or less this year and in the future.

Results suggest that IT budgets are likely to moderate in 2023, Pipers tech team wrote. They said expectations for 2023 spending fell to a 3.6% growth rate year-over-year, which was down by 1.3 percentage points, compared with six months ago.

The analysts said generative AI rose nine spots in priority to become the top emerging technology trend for the next three years with 75% of CIOs either testing or implementing projects. Security, storage, and application software were also top spending priorities, while hardware devices and servers were near the bottom.

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Enterprise testing and implementation of Gen AI appears to be consuming incremental budget dollars, Pipers team said.

The release of ChatGPT late last year and its rapid success have sparked a surge in interest for generative artificial-intelligence products that train on text, images, and videos to create content and provide analytical output. The chatbot uses a language model that generates humanlike responses based on word relationships it has found by digesting what has been written on the internet or in other text.

In early trading Thursday, Microsoft shares rose by 1.3% to $341.55.

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After looking at the CIO responses, Pipers team predicted hardware suppliers such as makers of computer servers were most likely to face budget cuts later this year.

Write to Tae Kim at

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Microsoft Is Big Winner as Corporate Tech Spending Shifts to AI - Barron's

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