Technology Sector Insights Report says consolidation to continue in the cyber security space
Pro
Image: Stockfresh
Big Tech is set to accelerate CapEx spending on artificial intelligence (AI) to roughly $320 billion in 2025, according to a new Technology Sector Insights report from stockbrokers Goodbody.
Big Tech brands including Microsoft, Amazon, Alphabet, and Meta have increased their spend on artificial intelligence capabilities, largely related to data centre build out amid a significant growth in data capability needs. The proposed spend of $320 billion in 2025 reflects an increase of roughly 40% on 2024.
Capacity constraints is a significant driver for the growth in capital expenditure (CapEx) on AI in the coming year. Amazon is leading the charge here with plans to spend over $100 billion in 2025, up from the $83 billion last year.
Microsoft plans to allocate $80 billion for AI data centres in its fiscal year 2025 with a significant portion dedicated to US operations, and marking an increase on the $45 billion committed in 2024. Google parent Alphabet is also projecting $75 billion in capital expenditures while Meta has budgeted $65 billion.
It comes as data usage is growing at a significant rate as online adoption grows. With the rapid deployment of AI generated content and systems that are generating and processing vast amounts of data, the global data generated continues to rise significantly. Other drivers include social media platforms; IoT device growth and smart technologies; cloud computing; ecommerce; streaming; and digital transactions.
Patrick O’Donnell, head of technology and growth research at Goodbody said: “This is a pivotal year for innovation and technological leadership among the big tech players as they seek to expand and secure greater AI capabilities in response to a surging demand on data and data storage.
“Ireland is a key player as it is a strategically important location for them within Europe. Its attractiveness will be helped by the EU’s recent announcement of the mobilisation of €200 billion for AI investments aiming to position Europe as a leader in the global AI landscape; but that said, they will also be competing too with the United States $500 billion AI data centre rollout to attract investment and lead the AI data charge.”
The demand for data underpins all of this. Internet data traffic is exploding in size as video, social and gaming together account for more than 75% of traffic. There are several factors driving this including the rapid growth of people online which has reached over seven billion, the rise of social media, the rise of AI tools, and the rise of ecommerce.
As a result, the demand for data centre capacity has surged. It is expected that due to cloud adoption and the processing needs of AI technologies that this will significantly rise further. By 2025, global data generation is expected to see a rise of 150% from the levels in 2023.
The rise in data demand has not only prompted larger tech companies to respond but start-ups are also attracting a significant level of capital investment. OpenAI’s partnership with SoftBank and Oracle for a $100 billion investment in AI-related infrastructure in the US, potentially rising to $500 billion over time, is significant.
Cyber security
With the growth in AI technology, there comes a growing threat landscape as bad actors seek to exploit or weaken loopholes in new infrastructure. This is prompting consolidation in the cyber space and the expansion of a suite of tools to counter it.
Regulatory frameworks like the EU’s NIS2 and DORA, and the UK’s Critical Third-Party Regime will drive companies to enhance their security protocols and ensure compliance with new regulations. This is driving a mix of mergers and acquisitions and increases cyber budgets for regulatory related workflow.
Meanwhile, the impact of generative AI on the cybersecurity industry has been significant and is driving the level of sophistication in attacks, arming bad actors with easier routes to organisations. This requires new solutions with zero-risk approach for organisations.
The rising digitilisation of organisational structures both of public/private entities creates and inherent need for increased cloud security requirements with a mix of vendors being used from Amazon Web Services to Microsoft’s Azure in the ongoing cloud transformation of company databases.
The financial cost associated with cyber-attacks is materially on the rise with a global cost of cybercrime to reach $13.8 trillion by 2028, growing materially from an estimated $9.2 trillion in 2024 which indicates a significant growth opportunity for cyber security defence organisations and is a leading driver of the continued investor interest in the segment.
TechCentral Reporters
