Generative AI fuels tech investments, but bottlenecks and challenges emerge
Sarah Cottle
Growth-Focused Executive | GM | Driving Profitability & Operational Excellence in B2B Data, Research, Advisory | M&A Integration | Governance | Digital Transformation | Trusted C-Suite Advisor | Board Member
Generative AI is reshaping technology investments and capital markets as organizations reassess their approaches to large language models, tech infrastructure and data. The technological shift has led to increased enterprise spending and new ventures focused on delivering tangible value. As of September, one-quarter of all technology M&A value in 2024 involved a target with machine learning capabilities, up from one-fifth in 2023, according to S&P Global Market Intelligence 451 Research.
Private equity firms are eager to?capitalize on the growth of US electric load associated with data centers that power AI technologies, striking deals with large tech companies to fund and build energy infrastructure. Some firms facilitate power generation and grid connections for hyperscalers through portfolio companies and joint ventures.
About 83% of enterprises anticipate growth in their AI workflows in the next two years, and two-thirds expect a need for infrastructural upgrades, according to a 451 Research study. 451 Research's Tech Demand Indicator shows that enterprises are increasingly keen to invest in GenAI initiatives, with AI a top spending priority over the past several quarters. Despite this willingness to invest, the growth momentum of GenAI technologies is hindered by significant bottlenecks related to chip supply, energy consumption and data management.
Another challenge facing the GenAI market is consumer adoption. GenAI tool developers still have plenty of work to do to win over large numbers of consumers who remain skeptical of the new technology. Consumers' financial conditions, tech literacy and perceptions of the economy significantly affect their willingness to adopt GenAI technologies. A comprehensive understanding of these factors is vital for businesses aiming to maximize GenAI's potential.
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Deep Dives
In-depth features looking at the impact of major news developments in key industries.
Financials
US banks' overdraft fee income hit highest level in 7 quarters in Q3
Overdraft fee income at US banks crept up in the third quarter to the highest level since the fourth quarter of 2022.
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Financials Research: Community bank earnings will recover despite weaker credit, sticky deposit costs????????
Community banks' net interest margins are expected to expand and support earnings growth in 2025 even as the group faces higher loan losses.
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US bank reserves grow for 10th straight quarter; share of gross loans steady
Optum Bank reported the largest sequential reserves-to-gross loans ratio increase among US banks, according to a Market Intelligence analysis.
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Europe's biggest banks bolster liquidity in Q3 2024
Most of Europe's 30 largest banks recorded higher liquidity coverage ratios year over year. Denmark's Nykredit led the pack, while Italy's UniCredit posted the biggest decline.
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Real Estate
US equity REIT capital offerings cut by over 80% in October
US real estate investment trusts raised $1.45 billion through capital offerings in October, down 81.3% from September, and 45.3% lower compared with a year ago.
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Credit and Markets
Institutions sell stocks, ETFs buy in October amid move to passive investing
US institutions have sold nearly the same amount of stocks that index and exchange-traded funds have bought on net over the past year.
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Energy and Utilities
RRA Research: Deferral accounting, fuel clause changes envisioned by Algonquin Mo. utility
In Empire District Electric's recently filed base rate case, the utility is looking to use deferral techniques to address certain costs and is seeking to alter its fuel adjustment clause to address costs not currently recoverable through the rider.
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NY Power Authority outlines green generation plan; critics worry it falls short
The draft renewable generation plan calls for the public power utility to develop an initial portfolio of 40 projects, totaling 3.5 GW.
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Utility-scale solar accounted for 3.9% of US net generation in 2023
That is up from a 3.4% share of generation in 2022 and a 2.8% share in 2021, according to an analysis by S&P Global Market Intelligence.
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Technology, Media and Telecommunications
Tech M&A outlook mixed under new Trump administration
Equity and policy analysts forecast a surge in M&A across sectors in 2025, following President-elect Donald Trump's return to the White House, though the outlook for the tech sector is less certain.
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Metals and Mining
Metals and Mining Research: CES 2024 – Gold exploration budgets down on value-oriented strategies
Gold exploration budgets declined 7% to $5.55 billion in 2024, driven by mergers, a growing preference for risk-averse assets and juniors' struggles to secure funding.
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The Week in M&A
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Asia-Pacific insurance M&A activity slows in Q3; 2 major deals face scrutiny
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Deal Tracker: Europe's infotech M&A value drops YOY to $1.86B in October
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Deal Tracker: Altair's $10.66B sale to Siemens boosts infotech M&A in October
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Deal Tracker: Verizon leads October media, telecom M&A with $1B spectrum buy
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The Big Number
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Trending
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