The focus on artificial intelligence in the tech business will lead to an 26.9% increase in AI spending this year. Global spending on AI, including software, hardware, and services for AI-centric systems, will reach $154 billion in 2023, up 26.9% from last year, according to a forecast from market research firm International Data Corporation (IDC). “The fastest growth in AI spending will come from the Media industry with a five-year CAGR (compound annual growth rate) of 30.2%.”
“The ongoing incorporation of AI into a wide range of products will result in a compound annual growth rate (CAGR) of 27.0% over the 2022-2026 forecast with spending on AI-centric systems expected to surpass $300 billion in 2026.
From a geographic perspective, the US will be the largest market for AI-centric systems, accounting for more than 50% of all AI spending worldwide throughout the forecast.
Western Europe will account for more than 20% of worldwide IT spending accompanied by a five-year CAGR of 30.0%, one of the fastest growth rates over the forecast period.
The People’s Republic of China will be the third largest AI market with the slowest growth rate (20.6% CAGR).
“Companies that are slow to adopt AI will be left behind – large and small. AI is best used in these companies to augment human abilities, automate repetitive tasks, provide personalized recommendations, and make data-driven decisions with speed and accuracy,” says Mike Glennon, senior market research analyst at IDC.
IDC says that one indicator of how broad spending on AI-centric systems will be over the next five years is that only one of 36 AI use cases identified by IDC will have a CAGR of less than 24% over the forecast period.
“Three of the leading AI use cases in terms of spending focus on sales and customer service functions: Augmented Customer Service Agents, Sales Process Recommendation and Augmentation, and Program Advisors and Recommendation Systems.”
“These three use cases will see investment from nearly every industry and combined will account for more than a quarter of all AI spending in 2023”, the forecast says.
“The other use cases that will see the largest spending this year support a more diverse set of tasks: IT Optimization, Augmented Threat Intelligence and Prevention Systems, and Fraud Analysis and Investigation.”
The two industries that will deliver the largest AI investments in 2023 and throughout the forecast are Banking and Retail, the forecast says. “The next largest industry for AI spending will be Professional Services followed by Discrete and Process Manufacturing.”
“Together, these five industries will account for more than half of all spending on AI-centric systems this year.”