Global spending on artificial intelligence (AI), including infrastructure, related IT and business services, will more than double by 2028 when it is expected to reach $632 billion, a new report said on Monday.
According to International Data Corporation (IDC), the rapid incorporation of AI, and GenAI particular, into a wide range of products will result in a compound annual growth rate (CAGR) of 29 per cent over the 2024-2028 forecast period.
“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,” 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 harmonisation of human and machines interplay, barriers to AI adoption at scale will continue to diminish,” she added.
GenAI solutions have captured the world’s attention over the past 18 months, but the amount spent will be smaller than all other AI applications, like 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, analysts expect GenAI spending to reach $202 billion, representing 32 per cent of overall AI spending.
According to the report, software will be the largest category of technology spending, representing over half the overall AI market for most of the forecast.
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, the report mentioned.
“While industry-specific AI use cases approach 27 per cent of the total spend by the end of the forecast period, the business functions that IDC expect will see accelerated AI investment are customer service, IT operations, and sales,” said Karen Massey, research director, Data & Analytics at IDC.
AI spending in the US 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, the report said.