Global investment in Artificial Intelligence (AI) is projected to reach $632 billion in 2028, a new forecast from the International Data Corporation (IDC) Worldwide AI and Generative AI Spending Guide has revealed.
These investments will be made in AI-enabled applications, infrastructure, and related IT and business services. According to the IDC 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 percent over the 2024 – 2028 forecast period.
Ritu Jyoti, Group Vice president and General Manager of AI and Data Research at IDC, noted that AI’s impact on businesses has been instrumental in improving industry innovations, among other things.
“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,” Jyoti stated. “With rampant innovations in trusted AI tools and technologies and improved harmonisation of human and machine interplay, barriers to AI adoption at scale will continue to diminish.”
IDC claimed that although 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, automatic speech recognition, and natural language processing.
It noted, however, that “the rapid growth in GenAI investments will enable the category to outpace the overall AI market with a five-year CAGR of 59.2 percent.”
IDC expects GenAI spending to reach $202 billion by the end of the forecast, representing 32 percent of overall AI spending. It disclosed that software will be the largest category of technology 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 AI platforms while the remainder will go toward AI Application Development and Deployment and AI System Infrastructure Software,” IDC said.
The global analytical company noted that the financial services industry will lead, followed by software, information services, and retail.
“With banking leading the way, the financial services industry will account for more than 20 percent 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 percent of all AI spending over the next five years,” it said.
It also added that AI infrastructure provisioning will be the leading use case for AI solutions for most of the forecast. However, due to early investment by service providers, AI infrastructure provisioning has the slowest projected growth rate among the use cases included in the Spending Guide (14.7 percent CAGR). Still, the IDC expects several other use cases to catch or overtake it by 2028.
These use cases include augmented fraud analysis and investigation, AI-enabled customer service, and self-service. The IDC added that the use cases that will see the fastest spending growth will be augmented claims Processing (35.8 percent CAGR) and Digital Commerce (33.2 percent CAGR).
