As per the report by IDC, worldwide spending on artificial intelligence (AI), including AI-enabled applications, infrastructure, and related IT and business services, will more than double by 2028, expected to reach $ 632 billion.
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 per cent over the 2024-2028 forecast period.
Commenting on the report, Ritu Jyoti, group vice president and general manager, AI and data research, IDC, said, “AI-powered transformations have delivered tangible business outcomes and value for organisations worldwide and they are building their AI strategies around employee experience, customer engagement, business process, and industry innovations. With rampant innovations in trusted AI tools and technologies and improved harmonisation 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 per cent. By the end of the forecast, it is expected that GenAI spending will reach $ 202 billion, representing 32 per cent 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 per cent. In comparison, AI software will see a five-year CAGR of 33.9 per cent.
Further, the financial services industry is expected to spend the most on AI solutions over the 2024-2028 forecast period. With banking leading the way, the financial services industry will account for more than 20 per cent 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 per cent of all AI spending over the next five years. The industries that will see the fastest AI spending growth are business and personal services (CAGR of 32.8 per cent) and transportation and leisure (CAGR of 31.7 per cent). In addition, 17 of the 27 industries included in the report are forecasted to have five-year CAGRs greater than 30 per cent.
Furthermore, 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 report (CAGR of 14.7 per cent) due to early investment by service providers, it is expected 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 (CAGR of 35.8 per cent) and digital commerce (CAGR of 33.2 per cent). Thirty of the 42 AI use cases identified in the report are forecasted to have five-year CAGRs greater than 30 per cent.
