According to the International Data Corporation (IDC), in 2023, businesses globally invested over $19.4 billion in GenAI technologies.
With a compound annual growth rate (CAGR) of 86.1% during the 2023–2027 forecast period, this spending—which includes GenAI software as well as related infrastructure gear and IT/business services—is predicted to more than double in 2024 and reach $151.1 billion in 2027.
According to Rick Villars, Group Vice President, Worldwide Research at IDC, “businesses accelerated their exploration of GenAI to boost business transformation in 2023 despite IT headwinds.” The transition to AI everywhere will reach a critical buildout phase in 2024 when businesses engage heavily in new initiatives to significantly cut costs and time spent on use cases related to employee and customer productivity. After that, investments that improve revenue and business outcomes will come into focus.
Over the next few years, IDC anticipates that investments in GenAI will follow a logical development as businesses move from early experimentation to aggressive infrastructure and trained data model construction to mainstream adoption with extensions to the periphery of all business processes.
The IT industry will make a much bigger and faster AI pivot during the same period that firms at all levels will experience a shift in their technology investments towards AI deployment and the adoption of AI-enhanced products/services.
This is due to the competition among businesses to launch AI-enhanced goods and services and support clients in implementing AI. AI will largely take the role of the cloud as the primary driver of innovation.
The biggest investment during the build-out phase will go towards GenAI infrastructure, which includes hardware, Infrastructure as a Service (IaaS), and system infrastructure software (SIS).
However, with a five-year CAGR of 99.6%, GenAI Platform and Application Software will progressively surpass infrastructure by the conclusion of the prediction. Similarly, with a five-year CAGR of 94.2 percent, GenAI Services, which include IT and business services, will almost exactly match infrastructure investment by the conclusion of the prediction.
Spending on GenAI will make up 29.0% of all AI spending by the end of the prediction, a considerable increase from 10.8% in 2023.
Spending on GenAI solutions is expected to be robust once they reach the build-out stage and become a fundamental component of digital business control systems used by organisations.
Ritu Jyoti, group vice president of global market research and advisory services at IDC for artificial intelligence and automation, stated: “Growing AI has stimulated investments in traditional AI solutions as we look ahead.” Across industries, the combination of generative and classical AI opens up a world of possibilities.”
