Spending On Generative AI Solutions To Double In 2024, Cross $150 Billion By 2027: IDC

Enterprises may have invested more than $19.4 billion worldwide on generative artificial intelligence solutions in 2023, which is likely to more than double in 2024, according to a forecast by International Data Corp.

The IDC forecast for the 2023–27 period also highlighted that the spending, which includes GenAI software, related hardware and services, will reach $151.1 billion in 2027, increasing at a compound annual growth rate of 86.1%.

Over the next few years, IDC anticipates that investments in GenAI will follow a natural progression as businesses move from experimentation to building infrastructure and trained data models, to mainstream adoption of the technology across spheres.

“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," Rick Villars, vice president of worldwide research at IDC, said. "From there, the focus will shift to investments that boost revenue and business outcomes."

The IT industry is expected to adopt AI faster and at a greater scale even as organisations across other industry verticals will witness a shift in technology investments towards AI deployment and the adoption of AI-enabled products and services. This is due to the competition among businesses to launch AI-enhanced goods and services, and support clients in implementing AI. AI is expected to replace cloud as the primary driver of innovation, the report said.

During the buildout phase, the majority of investments will go towards GenAI infrastructure, including hardware, infrastructure-as-a-service and system infrastructure software. However, GenAI platform and application software will progressively surpass infrastructure spending by 2027, with a five-year CAGR of 99.6%. Spending on GenAI services, including IT and business services, will almost equal infrastructure spending by the end of the forecast, with a five-year CAGR of 94.2%.

The report predicted that by the end of the forecast, GenAI spending will account for 29% of overall AI spending, from 10.8% in 2023. Spending on GenAI solutions will continue to grow beyond the buildout phase since they are becoming an essential component of digital business control platforms used by enterprises.

"As we look ahead to the future of AI, embracing a holistic approach that merges traditional AI with generative creativity will enable more versatile AI systems capable of adapting to evolving challenges while fostering disruptive innovation," Ritu Jyoti, vice president at IDC, said.