Investing.com -- Citi released its Q4 2024 Chief Investment Officer (CIO) survey results, revealing incremental improvements in budget expectations and shifts in investment priorities.
Per the findings, global IT budgets are projected to grow by 2.7% over the next 12 months, up 0.2% from the September survey.
US CIOs are slightly more optimistic, with budgets expected to increase by 2.7%, up 0.3% from the previous survey, while EMEA budgets remain stable at 2.6%.
“We view the results as a slight incremental positive for the demand environment heading into Q4, though note IT budgets still appear largely range bound within the 2.5-3% range seen over the last years,” Citi analysts stated.
Cybersecurity remains the top investment priority, followed by data analytics and generative AI. Digital transformation projects and cloud infrastructure adoption round out the top areas of focus.
“Cybersecurity remains CIOs’ top investment priority and sentiment here showed modest quarter-over-quarter (QoQ) improvement.” Generative AI continues to gain traction, with 79% of respondents indicating that spending on these projects will come from new or additional funding, rather than reallocating existing IT budgets.
Adoption is still in its early stages, with 31% of use cases in testing and only 18% in production. Interestingly, 54% of CIOs now believe that generative AI investments will not result in headcount reductions, a marked shift from previous surveys.
“Overall, the survey indicates that most use cases are still in the early stages with very few CIOs pointing to completion of projects in the testing phase and even less in production,” Citi analysts led by Tyler Radke said.
The survey reveals mixed trends across regions and sectors. Spending on public cloud infrastructure is expected to grow by 6%, with hyperscalers such as AWS and Google (NASDAQ:GOOGL) Cloud benefiting from generative AI-related demand.
Cyber budgets saw a quarter-over-quarter increase of approximately 7%, supported by the growing operationalization of generative AI. In EMEA, IT budget growth expectations remain below trend.
Vendor consolidation continues to be a prominent trend, especially in cybersecurity and data analytics. “Cyber is still the top category where CIOs look to consolidate spend,” the report notes, with Microsoft (NASDAQ:MSFT) and Palo Alto Networks (NASDAQ:PANW) positioned as key beneficiaries.
Shifting priorities are also evident, with cloud communications dropping to the ninth spot in investment rankings, signaling budget reallocation to higher-priority areas.
Challenges remain in areas such as hardware spending, where trends are mixed. “According to survey respondents, on a NTM vs LTM basis spending across PC storage and networking infrastructure are trending better while server spending is indicated to be trending down,” the note says.