Enterprises worldwide are expected to invest about $16-billion in generative artificial intelligence (GenAI) solutions in 2023, with spending predicted to increase at a compound annual growth rate (CAGR) of 73.3% from 2023 to 2027 to reach $143-billion by the end of the forecast period.
This rise in spending, which includes GenAI software, related infrastructure hardware and information technology (IT)/business services, is more than twice the rate of growth in overall AI spending and almost 13 times greater than the CAGR for worldwide IT spending over the same period, new data from the International Data Corporation (IDC) shows.
By 2027, GenAI spending will account for 28.1% of overall AI spending, up significantly from 9% in 2023, according to the IDC report, ‘GenAI Implementation Market Outlook: Worldwide Core IT Spending for GenAI Forecast, 2023 to 2027’.
The report provides IDC’s initial consolidated worldwide GenAI implementation forecast, providing insights on how, where and when organisations will allocate their spending on core IT technology products/services to implement GenAI capabilities within their businesses from 2023 to 2027.
“Generative AI is more than a fleeting trend or mere hype. It is a transformative technology with far-reaching implications and business impact. With ethical and responsible implementation, GenAI is poised to reshape industries, changing the way we work, play and interact with the world,” explains IDC worldwide AI and automation market research and advisory services group VP Ritu Jyoti.
According to the IDC, GenAI investments are expected to follow a natural progression over the next several years as organisations transition from early experimentation to aggressive build-out with targeted use cases to widespread adoption across business activities with an extension of GenAI use to the edge.
GenAI infrastructure, including hardware, infrastructure as a service and system infrastructure software, will represent the largest area of investment during the build-out phase; however, GenAI services will gradually overtake infrastructure with a five-year CAGR of 76.8%.
The GenAI software segments will see the fastest growth over the 2023 to 2027 period, with GenAI platforms/models delivering a CAGR of 96.4%, followed by GenAI application development and deployment and applications software with an 82.7% CAGR.
“The rate of GenAI spending will be somewhat constrained through 2025, owing to turbulence in workload shifts and resource allocation, not just in silicon but also in networking, facilities, model confidence and AI skills,” adds IDC Worldwide Research group VP Rick Villars.