Financial services expected to be biggest AI-spender
Worldwide spending on artificial intelligence, including AI-enabled applications, infrastructure, and related IT and business services, will more than double by 2028 when it will reach $632 billion. The rapid incorporation of AI, and generative AI in particular, into a wide range of products will result in a compound annual growth rate (CAGR) of 29.0% over 2024-2028. The industry that is expected to spend the most on AI solutions 2024-2028 is financial services, market research firm International Data Corporation (IDC) says in a new forecast.
“ With banking leading the way, the financial services industry will account for more than 20% of all AI spending. The next largest industries for AI spending are software and information services and retail.”
“Combined, these three industries will provide roughly 45% of all AI spending over the next five years.”
“The industries that will see the fastest AI spending growth are Business and Personal Services (32.8% CAGR) and Transportation and Leisure (31.7% CAGR)”, the forecast says.
“While industry-specific AI use cases approach 27% of the total spend by the end of the forecast period, the business functions that IDC expects will see accelerated AI investment are customer service, IT operations, and sales”, says the company’s research director, Karen Massey.
AI spending in the United States is expected to 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. GenAI spending in the US is forecast to be $108 billion in 2028.
Western Europe will be the second largest region for AI spending followed by China and Asia/Pacific (excluding Japan and China).
Spending on GenAI solutions is expected to be less than the combined total of all other AI applications, such as machine learning, deep learning, and automatic speech recognition & natural language processing.
The rapid growth in GenAI investments will enable the category to outpace the overall AI market with a five-year CAGR of 59.2%. By the end of the forecast, IDC expects GenAI spending to reach $202 billion, representing 32% of overall AI spending.
Software will be the largest category of technology spending, representing more than half the overall AI market for most of the forecast. Two thirds of all software spending will go to AI-enabled Applications and Artificial Intelligence Platforms while the remainder will go toward AI Application Development & Deployment and AI System Infrastructure Software.
Spending on AI hardware, including servers, storage, and Infrastructure as a Service (IaaS), will be the next largest category of technology spending, according to the forecast.
“IT and business services will see a slightly faster growth rate than hardware with a CAGR of 24.3%. In comparison, AI software will see a five-year CAGR of 33.9%.”
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