Worldwide spending on artificial intelligence (AI), including
AI-enabled applications*, infrastructure, and related IT and
business services, will more than double by 2028 when it is
expected to reach $632 billion, according to a new forecast from
the International Data Corporation (IDC) Worldwide AI and
Generative AI Spending Guide. The rapid incorporation of AI, and
generative AI (GenAI) in particular, into a wide range of products
will result in a compound annual growth rate (CAGR) of 29.0% over
the 2024-2028 forecast period.
"AI-powered transformations have delivered tangible business
outcomes and value for organizations worldwide and they are
building their AI strategies around employee experience, customer
engagement, business process, and industry innovations," said Ritu
Jyoti, group vice president and general manager, AI and Data
Research at IDC. "With rampant innovations in trusted AI tools and
technologies and improved harmonization of human and machines
interplay, barriers to AI adoption at scale will continue to
diminish."
While GenAI has captured the world's attention over the past 18
months, spending on GenAI solutions will be less than the combined
total of all other AI applications, such as machine learning, deep
learning, and automatic speech recognition & natural language
processing. However, the rapid growth in GenAI investments will
enable the category to outpace the overall AI market with a
five-year CAGR of 59.2%. By the end of the forecast, IDC expects
GenAI spending to reach $202 billion, representing 32% of overall
AI spending.
Software will be the largest category of technology spending,
representing more than half the overall AI market for most of the
forecast. Two thirds of all software spending will go to AI-enabled
Applications and Artificial Intelligence Platforms while the
remainder will go toward AI Application Development &
Deployment and AI System Infrastructure Software. Spending on AI
hardware, including servers, storage, and Infrastructure as a
Service (IaaS), will be the next largest category of technology
spending. IT and business services will see a slightly faster
growth rate than hardware with a CAGR of 24.3%. In comparison, AI
software will see a five-year CAGR of 33.9%.
The industry that is expected to spend the most on AI solutions
over the 2024-2028 forecast period is financial services. With
banking leading the way, the financial services industry will
account for more than 20% of all AI spending. The next largest
industries for AI spending are software and information services
and retail. Combined, these three industries will provide roughly
45% of all AI spending over the next five years. The industries
that will see the fastest AI spending growth are Business and
Personal Services (32.8% CAGR) and Transportation and Leisure
(31.7% CAGR). In addition, 17 of the 27 industries included in the
Spending Guide are forecast to have five-year CAGRs greater than
30%.
AI Infrastructure Provisioning will be the leading use case for
AI solutions for most of the forecast. However, with the slowest
projected growth rate among the use cases included in the Spending
Guide (14.7% CAGR) due to early investment by service providers,
IDC expects several other use cases to catch or overtake it by
2028. These use cases include Augmented Fraud Analysis and
Investigation and AI-enabled Customer Service and Self Service. The
use cases that will see the fastest spending growth will be
Augmented Claims Processing (35.8% CAGR) and Digital Commerce
(33.2% CAGR). Thirty of the 42 AI use cases identified in the
Spending Guide are forecast to have five-year CAGRs greater than
30%.
A table of the top 5 AI use cases based on five-year CAGRs is
available by viewing this press release on IDC.com.
"We are thrilled to release a new version of IDC's Worldwide AI
and Generative AI Spending Guide with all new AI use cases aligned
to line of business (LoB) functions and providing a GenAI/Rest of
AI and industry view of each use case," said Karen Massey, research
director, Data & Analytics at IDC. "While industry-specific AI
use cases approach 27% of the total spend by the end of the
forecast period, the business functions that IDC expects will see
accelerated AI investment are customer service, IT operations, and
sales."
AI spending in the United States will reach $336 billion in
2028, making it the largest geographic region for AI investment and
accounting for more than half of all AI spending throughout the
forecast period. GenAI spending in the U.S. is forecast to be $108
billion in 2028. Western Europe will be the second largest region
for AI spending followed by China and Asia/Pacific (excluding Japan
and China).
* Taxonomy Note: The AI-enabled applications market
includes process and industry applications that automatically
learn, discover, and make recommendations or predictions. These
applications use natural language processing (NLP), search, and
machine learning (ML) to provide expert assistance in a wide range
of areas. To be considered an AI-enabled application, the AI must
meet the following conditions: the AI technology must be central
and critical to the function of the application; the AI technology
must include some sort of machine learning, and some sort of
user/data interaction or knowledge representation capability; and
the AI application may sometimes only be bought in conjunction with
another business application (i.e., ERP, CRM, SCM, and HCM).
Generative AI is a subsegment of AI that involves unsupervised and
semi-supervised algorithms that enable computers to create new
content using previously created content, such as text, audio,
video, images, and code in response to short prompts.
The IDC Worldwide AI and Generative AI Spending Guide (V2 2024)
examines the artificial intelligence (AI) and generative AI (GenAI)
systems opportunity from the use case, technology, industry, and
geography perspectives. The Spending Guide quantifies the AI
opportunity by providing data for 42 use cases across 27 industries
in nine regions and 32 countries. Data is available for two AI
types (GenAI and rest of AI), three technology groups with nine
technology categories comprising 17 technologies, and two
deployment types (public cloud services and on-premises/other).
More information about the data provided in IDC's AI and
Generative AI Spending Guide is available in the product overview
here.
For a broader look at IDC's AI and GenAI Data & Analytics
solutions, or to request an analyst briefing, you can fill out this
form.
About IDC Spending Guides IDC's Spending Guides provide a
granular view of key technology markets from a regional, vertical
industry, use case, buyer, and technology perspective. The Spending
Guides are delivered via pivot table format or custom query tool,
allowing the user to easily extract meaningful information about
each market by viewing data trends and relationships.
About IDC International Data Corporation (IDC) is the
premier global provider of market intelligence, advisory services,
and events for the information technology, telecommunications, and
consumer technology markets. With more than 1,300 analysts
worldwide, IDC offers global, regional, and local expertise on
technology, IT benchmarking and sourcing, and industry
opportunities and trends in over 110 countries. IDC's analysis and
insight helps IT professionals, business executives, and the
investment community to make fact-based technology decisions and to
achieve their key business objectives. Founded in 1964, IDC is a
wholly owned subsidiary of International Data Group (IDG), the
world's leading tech media, data, and marketing services company.
To learn more about IDC, please visit www.idc.com. Follow IDC on
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Michael Shirer 508-935-4200 press@idc.com