The gatekeepers of information technology budgets at major North American companies are ready to start spending again. Silicon Valley and investors in tech stocks, like the Club, are rejoicing. According to Piper Sandler’s 2024 survey of chief information officers, their top priorities over the next three years, unsurprisingly, are in the areas of cloud and artificial intelligence as well as cybersecurity. That bodes well for seven names in our portfolio that span those three mega-trend buckets. The CIOs told Piper that they see “noticeable improvement in enterprise IT spending optimism ahead of 2024, 2025, and 2026 with expectations of a slight acceleration” – a long-awaited thawing of budget optimization that’s pressured the top-line growth of the providers of the hardware, software and services that run and protect corporate America. In aggregate, the survey results point to a 60 to 70 basis point acceleration for IT spending growth in each of the next three years, with cloud spending growth much stronger at 150 to 300 basis points. Should that cloud budget boost materialize, it would mean that by 2026 the growth rate would be double what we’ve seen in 2023. Cloud and AI A rebound in cloud growth is expected thanks in large part the renewed focus and need to invest in artificial intelligence. In fact, 73% of the CIO respondents said they are “implementing now, plan to implement, or are testing generative AI.” Club name beneficiaries of AI spending would include Microsoft and Salesforce – Microsoft for its partnership with OpenAI and recently launched subscription Copilot AI assistant for its Office suite, and Salesforce for helping customers implement generative AI capabilities through its new Einstein GPT offering. In the broader cloud landscape, dominated by the Big 3 hyperscalers Amazon Web Services (AWS), Microsoft’s Azure, and Alphabet ‘s Google Cloud, the Piper survey results painted a mixed picture, with the CIOs “most positive” about AWS and…
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