Market intelligence firm International Data Corp. (IDC) predicts a surge in Generative AI (GenAI) investment, forecasting global spending of $19.4 billion in 2023, set to more than double by 2024 and reach $151.1 billion by 2027.
This projection by IDC is outlined in the GenAI Implementation Market Outlook report, which also anticipates a compound annual growth rate (CAGR) of 85.9% from 2023 to 2027.
The report shows how organizations will allocate their technology spending to integrate GenAI solutions into their operations during this period. IDC said it anticipates a natural evolution in GenAI investments, transitioning from experimental phases to robust infrastructure development and widespread implementation across various business sectors, extending even to the edge of business activities.
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“In 2024, the shift to AI everywhere will enter a critical buildout phase as enterprises make major new investments with the goal of drastically reducing the time and costs associated with customer and employee productivity use cases,” said Rick Villars, group vice president, Worldwide Research at IDC. “From there, the focus will shift to investments that boost revenue and business outcomes.”
GenAI Infrastructure
GenAI Infrastructure, comprising hardware, Infrastructure as a Service (IaaS), and system infrastructure software (SIS), will initially dominate investment. However, GenAI Platform and Application Software will gradually surpass infrastructure spending, expected to grow with a five-year CAGR of 99.1%. GenAI Services, including IT and business services, will almost match infrastructure spending with a five-year CAGR of 94.6%.
“Generative AI has served as a catalyst for investments in traditional AI solutions,” said Ritu Jyoti, group vice president, Worldwide Artificial Intelligence and Automation market research and advisory services at IDC. “The synergy between traditional and generative AI opens up a world of possibilities across industries.”
According to IDC, by 2027, GenAI spending will constitute 29% of overall AI expenditure, a substantial rise from the 10.8% reported in 2023. IDC forecasts a sustained investment in GenAI solutions as they become fundamental elements in enterprises’ digital business platforms.