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Worldwide investment in GenAI forecasted to double in 2024

Enterprises will more than double the worldwide investment in GenAI solutions in 2024 from $19.4 billion in 2023 and reach $151.1 billion in 2027 with a compound annual growth rate (CAGR) of 86.1% over the 2023-2027 period, International Data Corporation (IDC) says in an updated forecast. The spending  includes GenAI software as well as related infrastructure hardware and IT/business services. 

“Despite IT headwinds in 2023, businesses accelerated their exploration of GenAI to boost business transformation”, says Rick Villars, group vice president, Worldwide Research at IDC.

“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. From there, the focus will shift to investments that boost revenue and business outcomes”.

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The forecast says GenAI investments will follow a natural progression over the next several years as organizations transition from early experimentation to aggressive infrastructure and trained data model building to widespread adoption with extensions to the edge of all business activities.

“While companies at all levels will experience a shift in their technology investments toward AI implementation and the adoption of AI-enhanced products/services, the IT industry will make much a greater and faster AI pivot during the same period.” 

“This is because every company will race to introduce AI-enhanced products/services and to assist their customers with AI implementations. For most, AI will replace cloud as the lead motivator of innovation.”

The IDC says GenAI Infrastructure, including hardware, Infrastructure as a Service (IaaS), and system infrastructure software (SIS), will represent the largest area of investment during the build out phase. 

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“But GenAI Platform and Application Software will gradually overtake infrastructure by the end of the forecast with a five-year CAGR of 99.6%. Similarly, GenAI Services, including IT and business services, will nearly equal infrastructure spending by the end of the forecast with a five-year CAGR of 94.2%.”

“By the end of the forecast, GenAI spending will account for 29.0% of overall AI spending, up significantly from 10.8% in 2023. GenAI spending will remain strong well beyond the build out phase as these solutions become a foundational element in enterprises’ digital business control platforms.”

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