Enterprise technology demand has stabilized, and vendors are expecting gradual demand improvement into the second half with pockets of generative AI-driven strength.
Financial reports from key enterprise tech vendors are confirming what a Constellation Research survey has found. CXOs are more optimistic, positioning for growth and looking toward automation and generative AI projects. In fact, there's a decent bit of IT spending optimism--or at least the theory that the worst is over.
Constellation Research's 2023 H1 "CxO Business Confidence Survey" found that 32% of the IT budget is going to investments that add to top-line growth and 28% is going to efficiency. That balance is reflected in comments from enterprise technology vendors. Here's a look at what vendors say on earnings conference calls.
Francois Locoh-Donou, CEO of F5
"From a demand perspective, we are seeing some early signs of stabilization. Q3 demand played out slightly above our beginning of quarter forecast, which was up from Q1 and Q2 this year, though still off from FY '22 levels."
Ben Suh, SVP of IR at Samsung
"We expect global IT demand in the business environment to recover gradually, driving improved results especially in our component businesses. However, challenges associated with a demand recovery are also likely to persist due to macro risks and other factors."
ServiceNow CEO Bill McDermott
"We see a sustained demand environment and pipeline for all of our product businesses, geographic regions and industry verticals. We're set up very well for a strong second-half.
This is a dynamic period for the IT industry. Think about it this way. Every leader in every department, in every business, in every industry is writing a new playbook for the AI world. CEO's are sponsoring them. The C-suite across all functions is funding them."
Seagate CEO Dave Mosley
"In today’s earliest stages of gen AI development, you’re seeing the necessary first steps of building and training of AI models. These efforts require significant investment in compute architecture, and we’re seeing that investment ramp today. The next stage of development will yield enterprise-specific use cases that leverage trained AI models to convert data into value-enhancing applications."
Microsoft CEO Satya Nadella
"Every customer I speak with is asking not only how, but how fast they can apply next-generation AI to address the biggest opportunities and challenges they face, and to do so safely and responsibly."
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PROS Holdings CEO Andres Reiner
"Across the B2B industries we serve, sales cycles with new customers in 2023 are 30% faster year-over-year. We're also driving rapid time to value, leading to rapid expansions."
Alphabet CFO Ruth Porat
"Google Cloud Platform revenue growth remained strong across geographies, industries and products. That being said, we saw a continued moderation in the rate of consumption growth as consumers optimize their spend."
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