Generative AI Spending to Double in 2024, Exceeding $150 Billion by 2027
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According to forecasts by International Data Corporation (IDC), global corporate investment in generative artificial intelligence (GenAI) solutions reached $19.4 billion in 2023 and is expected to double in 2024. The projection also indicates that expenditures encompassing GenAI software, related hardware, and services will surge to $151.1 billion by 2027, with a compound annual growth rate (CAGR) of 86.1%.
In the coming years, IDC anticipates that GenAI investments will undergo a natural developmental trajectory, with enterprises gradually transitioning from experimental phases to building infrastructure and training data models, ultimately achieving mainstream technological adoption across various sectors.
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IDC Global Research Vice President Rick Villars stated: "In 2024, the transformation towards AI everywhere will enter a crucial expansion phase. Enterprises will make substantial new investments aimed at significantly reducing time and costs associated with customer and employee productivity use cases. Subsequently, the focus will shift to investments that increase revenue and improve business outcomes."
The IT industry is expected to adopt artificial intelligence more rapidly and on a larger scale. Meanwhile, organizations in other vertical industries will witness a shift in technology investments towards AI deployment and the adoption of AI-enabled products and services. This is driven by enterprises competing to launch AI-enhanced goods and services, as well as supporting customers in implementing AI. AI is projected to replace cloud computing as the primary driver of innovation.
During the expansion phase, most investments will focus on GenAI infrastructure, including hardware, infrastructure as a service, and system infrastructure software. However, by 2027, GenAI platforms and application software will gradually surpass infrastructure spending with an annual growth rate of 99.6%. Expenditure on GenAI services, including IT and business services, will nearly match infrastructure spending by the end of the forecast period, growing at an annual rate of 94.2%.
The report predicts that by the end of the forecast period, GenAI expenditure will account for 29% of total AI spending, up from 10.8% in 2023. As they become an essential component of digital business control platforms used by enterprises, spending on GenAI solutions will continue to grow beyond the expansion phase.
Ritu Jyoti, Vice President at IDC, stated: "Looking ahead to the future of AI, adopting a comprehensive approach that combines traditional AI with generative creativity will make AI systems more versatile, capable of adapting to evolving challenges while fostering disruptive innovation."