Dive Brief:
- AI is poised to transform and expand the cloud economy as it advances software capabilities, according to a Bessemer Venture Partners report.
- Companies with AI/ML capabilities are a top investment priority, favored by nearly all of the firm’s partners, the venture capital firm said, basing its analysis on a survey of 60 of its investors.
- After a challenging year for the cloud economy, AI has reignited investor optimism, Janelle Teng, VP on the growth equity team at Bessemer Venture Partners, told CIO Dive.
Dive Insight:
Cloud remains the dominant force in enterprise modernization, as companies seek to leverage big data, reduce technical debt and deploy best-in-class software solutions across business functions.
With digital transformation on most enterprise agendas, cloud markets followed historic trends and outperformed broader economic indices over the last year, growing at more than twice the rate of the average S&P 500 company, the report said.
Advances in large language model-based AI have primed enterprise interest in the technology.
In an October report, Forrester forecast a doubling of enterprise spend on AI software over the next two years, just over a month before ChatGPT’s initial launch.
As enterprise enthusiasm for generative AI and other emerging technologies grows, so will cloud consumption, according to a recent Gartner report. The analyst firm expects end-user spending on cloud to reach nearly $600 billion in 2023, up more than 21% year over year.
In the wake of a difficult quarter for venture capital, highlighted by the Silicon Valley Bank collapse, the start-up ecosystem is getting a boost from AI innovation, Teng said.
“We’ve seen new products coming from AI-native start-ups and other companies embedding AI into the current suite,” Teng said. “There's a lot of democratization and increased access to these tools — everyone's sort of benefiting from a wave that's lifting all ships.”
AWS, Microsoft and Google Cloud were all bullish on generative AI and its potential to spur additional growth during recent earnings calls.
“We’re not close to being done inventing in AWS," Amazon CEO Andy Jassy said during the company's Q1 earnings call, for the period ending March 31.
Jassy cited the company's deployment of large language models, generative AI and the chips and managed services associated with them.
"In my opinion, few folks appreciate how much new cloud business will happen over the next several years from the pending deluge of machine learning that’s coming," Jassy said.
