Tech sector faces cautious optimism as IT spending intent cools, IPOs rebound

In the second quarter, businesses' technology spending intent experienced a significant decline. However, key categories such as cloud infrastructure, AI and information security remained stable, indicating that organizations continue to prioritize their spending in these critical areas. The S&P Global Market Intelligence 451 Research's US Technology Demand Indicator (TDI) fell more than 3 points to 51.9, marking its lowest reading since the second quarter of 2024. Despite this drop, the TDI remains in expansion territory, as any score above 50 indicates increased spending. The decline from the first quarter's 55.1 reading reflects a more cautious approach among companies, particularly regarding nonessential categories like workforce and collaboration tools and customer experience applications.

Despite the uncertainty surrounding tariffs and trade policies, analysts' revenue expectations for the tech sector have not been significantly affected, according to Visible Alpha. The outlook also has improved for tech IPOs, which are rebounding from last year's lows as global markets recover from earlier tariff-driven declines. At the end of 2024, there was optimism for a strong start to the new year for tech IPOs, bolstered by a pro-business stance from the Trump administration. However, uncertainty over tariff policies initially led to a stock market sell-off, cooling IPO activity. As the administration moderated its tariff changes, market conditions improved, prompting technology firms to consider public offerings again.

By mid-2025, developed markets had seen approximately 36 tech IPO deals, raising over $7.1 billion, surpassing last year's total of $6.9 billion, according to Market Intelligence data. Strong interest in going public is particularly evident in the AI, fintech and cryptocurrency sectors, driven by favorable public market performance for these asset classes.

CoreWeave Inc., an AI cloud services provider, has seen its stock price nearly quadruple since its IPO in 2025, despite concerns about its business model. Analysts project that CoreWeave's revenue will more than double to $5 billion in 2025 and reach $11.6 billion in 2026, with a compound annual growth rate of 106% from 2024 to 2027, eventually turning net income profitable by the end of the forecast period.

Looking ahead, analysts at 451 Research emphasize that the third quarter will be crucial in determining whether the recent drop in tech spending intent is a temporary blip caused by tariff uncertainty or part of a longer-term trend, with the potential for the TDI to fall into negative territory. In the tech IPO market, industry observers expect activity to pick up in the second half of 2025, though some companies remain cautious about going public.

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