The rapid evolution of AI technologies worldwide highlights a strong and growing commitment from both the public and private sectors to leverage AI for innovation, competitive advantage, and tackling complex challenges. As AI and Generative AI become increasingly integrated into various business domains, IDC offers a detailed perspective on this transformation with a comprehensive overview of AI spending by technology type, geography, and use case.
In 2024, organizations are projected to spend $235 billion on AI, a figure that is expected to nearly triple, reaching over $630 billion by 2028, fueled by an almost 30% compound annual growth rate (CAGR). Generative AI, a subset of this broader AI ecosystem, accounts for 17.2% of global AI spending today. Its growth is particularly remarkable, with projections indicating it will make up 32% of AI investments by 2028, driven by a staggering 60% five-year CAGR.
Key Drivers of AI Investment
Several factors are driving this surge in AI spending:
- Technological Advancements: Innovations in AI, including machine learning, natural language processing, and computer vision, are rapidly expanding the potential applications of AI. These advancements are encouraging organizations to invest more heavily in AI solutions.
- Economic Competitiveness: AI is increasingly seen as essential for enhancing operational efficiency, spurring innovation, and maintaining a competitive edge in the global market.
- Data Explosion: The exponential growth of data has created an urgent need for advanced data analysis, interpretation, and security. AI is playing a pivotal role in helping organizations manage and make sense of this vast data landscape.
- Consumer Expectations: As consumers demand more personalized, efficient, and innovative services, companies are turning to AI to meet these rising expectations.
IDC’s AI and Generative AI Spending Guide is designed to keep pace with these developments, offering the most up-to-date market insights through a comprehensive and high-quality forecast. This latest release features expanded technology coverage and a modernization of AI use cases, ensuring our clients have the best data to support their strategic decisions.
Learn more about IDC’s AI and GenAI Spending Guide by downloading this product overview.
AI Spending by Technology: A Closer Look
AI Platforms have emerged as the leading area of investment, accounting for nearly 25% of the overall AI core IT spend by 2028. Within this category, Generative AI Software Services stand out as the most significant and fastest-growing segment, with a 70% five-year CAGR. To provide a clearer view of the landscape, IDC has expanded its coverage of AI Platforms, offering insights into vendor market share as well as forecasts for industry and use case opportunities.
While software represents about 57% of AI and Generative AI spending, hardware and services each account for approximately 24%. Service providers are particularly active in investing in server and storage hardware, especially as they seek to offer Infrastructure-as-a-Service (IaaS) to enterprise customers. This focus on infrastructure highlights the critical role that robust hardware plays in supporting the expanding demands of AI applications.
Regional Insights: AI Spending Across the Globe
From a regional perspective, the Americas lead the way in AI investment, commanding nearly 60% of global AI spending and experiencing a 30% five-year CAGR. EMEA follows as the second-largest region, capturing 23% of global spending with growth rates comparable to those in the Americas. Meanwhile, organizations in the Asia-Pacific and Japan (APJ) region, who were early adopters of certain AI technologies, may see their global share decrease slightly by 2028 as other regions accelerate their investments and catch up.
Looking Forward: Navigating the Future of AI
As we look ahead, AI spending is expected to continue its robust growth, driven by new applications and innovations. However, this rapid expansion also underscores the importance of developing ethical frameworks, cultivating skilled workforces, and implementing transparent policies to ensure that AI is used responsibly and effectively. The future of AI holds great promise, but it also demands careful stewardship to maximize its benefits while minimizing potential risks.
IDC’s commitment to providing deep insights and forward-looking analysis remains unwavering, as we help our clients navigate the evolving AI landscape with confidence and clarity.
Conclusion:
As AI continues to redefine industries and reshape global markets, staying informed about its trends and impacts is critical for making sound strategic decisions. IDC’s latest insights into AI and Generative AI spending offer a clear and comprehensive guide to navigating this dynamic landscape. By understanding the key drivers, technological advancements, and regional differences, organizations can better position themselves to harness AI’s full potential. As we move forward, the focus must remain on not only embracing these innovations but also ensuring they are deployed ethically and sustainably, paving the way for a future where AI benefits all.
Contributing author: Mariana Fang – Research Analyst, Data & Analytics
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