Can AI Save Everyone's Bacon?
As 2024 rolls on, the enterprise markets for telecom and cloud services are a study in mixed messaging. On one hand, both telecom service providers and public cloud hyperscalers report that sales cycles are longer and more complicated. But both also claim strong customer interest in artificial intelligence (AI), particularly generative AI (GenAI), which creates code, text, or multimedia output from natural language input.
When it comes to actually investing in AI, however, hyperscalers have put their money where their mouth is, apparently funneling money into AI infrastructure while cutting workforce and other costs elsewhere. Clearly, for the hyperscalers, capital expenditure (capex) on AI infrastructure could edge out other investments this year.
Meanwhile, telcos are lagging in spending, though claiming interest in using AI for operations (AIOps), including network automation, customer service, predictive maintenance, improved security, and mobile network augmentation.
What is the financial situation for both camps? And what does that mean for potential capex output this year? Looking back, hyperscalers showed significant growth in 2023, while telco earnings sloped downward, indicating ongoing market preoccupation with cloud computing versus relatively flat interest in telco business services. Can customer enthusiasm for AI change any of this? That appears to be an open question.
The Telco Situation
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