UK AI budgets shift to data infrastructure & storage

UK organisations are directing most of their artificial intelligence budgets towards data infrastructure, with nearly two-thirds of spending focused on data, storage and processing power rather than software, according to research from cloud storage provider Wasabi.

Wasabi's fourth annual Cloud Storage Index found that 62% of AI budgets in the UK go to the data, storage and compute that underpin AI applications. A further 36% is allocated to AI software and software-as-a-service tools.

The study, conducted with research firm Vanson Bourne, surveyed 1,700 IT decision makers worldwide, including 200 in the UK. It examined data and cloud storage for AI, data security, and cloud storage budgets and fees.

The results suggest organisations are shifting priorities as they move from experimentation to wider adoption. More than half of UK respondents plan to increase AI infrastructure budgets over the next year, 42% expect spending to remain at current levels, and 3% anticipate a reduction.

Budget priorities

Wasabi said the findings show infrastructure is becoming central to AI programmes. The survey also found that only 25% of UK organisations are already seeing a positive return on investment from AI projects, while 48% expect positive returns within the next year.

Data storage issues were the most commonly cited obstacle to implementing AI projects and systems. Cost, data access and data management were the main storage-related factors, alongside compute constraints and data quality problems.

Andrew Smith, Wasabi Technologies' Director of Strategy and Market Intelligence and a former IDC analyst, said this differs from the broader public cloud market, where software revenue typically outweighs infrastructure services.

"When we look at revenue allocations at the highest level of the public cloud services market, the vast majority comes from software/SaaS, not infrastructure services (IaaS). But emerging AI workloads and initiatives are changing this dynamic. What's fascinating in our survey results this year is how most AI budget allocation is going toward infrastructure, not SaaS. In other words, it's the opposite of what we might expect from a traditional market standpoint, and it illustrates the critical role cloud storage and cloud infrastructure services play in this generational buildup of AI-enabled solutions and services."

Hybrid approaches

The report also highlighted operational choices around AI data pipelines. It found that 72% of UK respondents use hybrid storage-a mix of on-premises and public cloud resources-for AI workflows.

Respondents favoured public cloud storage at two stages: data retrieval, ingest and aggregation, and model retention and archiving. This suggests public cloud services are often used at the beginning and end of AI data processes, while other stages remain on-premises or in private environments.

The preference for hybrid approaches reflects the range of data types and governance requirements in AI projects. It also adds complexity for IT teams managing data across multiple environments while controlling costs.

Security concerns

The survey identified a confidence gap on cloud security and resilience among UK organisations. Only 51% said they were completely confident their data would meet regulatory or compliance requirements if audited by a third party.

Concerns also emerged about cyber resilience. The study found that 62% of UK organisations are not completely confident their data would remain operational and unaltered after a cyberattack, higher than the global average of 53%.

Among those lacking confidence, 41% said their public cloud provider does not provide the security tools needed to mitigate cyberattacks. The findings add to wider questions about which controls sit with the provider and which remain the customer's responsibility.

Fees and overspend

Cost management emerged as another major issue, beyond infrastructure spending linked to AI. Wasabi found that fees account for 48% of cloud storage spending in the UK, rather than storage capacity itself.

The survey also found that 46% of UK respondents exceeded their budget for public cloud storage in 2025. Wasabi attributed overruns to growth in storage consumption and migration activity, alongside fee structures, and said 84% cited at least one fee-related reason for spending above expectations.

Dave Friend, founder and CEO of Wasabi Technologies, said storage economics and data management can affect the financial outcomes of AI programmes.

"As organisations scale AI initiatives, they face mounting data storage and data quality challenges that can quickly erode ROI if not managed effectively. Cost-efficient, reliable storage is essential to ensure high-quality data is readily available for AI models, enabling better outcomes without unsustainable infrastructure costs. This drives home the need for affordable, secure, high-performance cloud storage so budgets stay in line with expectations, and data remains secure and accessible."

The survey was conducted in November and December 2025 among organisations with more than 100 employees across public and private sectors in multiple countries. Respondents were required to be involved in public cloud storage purchasing decisions.