IDC has forecast that enterprises will invest nearly $16 billion worldwide on generative AI solutions in 2023 and it expects this to grow at a compound annual growth rate (CAGR) of 73.3% between 2023 and 2027 to reach $143 billion in 2027. The figures include spending not only on generative AI software, but also on related infrastructure hardware and IT and business services.
► IDC expects five-year CAGR of 73.3%
► Initial spending may be constrained
Generative AI is expected to grow at more than twice the rate of overall AI spending and almost 13 times greater than the CAGR for worldwide IT spending over the same period. However, IDC also noted that investments will follow ‘a natural progression’ over several years as organisations transition from early experimentation to ‘aggressive’ build outs and targeted use cases.
It expects the rate of spending to be ‘somewhat constrained through 2025 due to turbulence in workload shifts and resource allocation’. It also flagged the potential for concerns over pricing, privacy and security, and the potential for major consumer antipathy or government interventions.
Even so, by the end of the forecast, ICD expects generative AI spending to account for 28.1% of overall AI spending, up from 9.0% in 2023. Areas of fastest growth will be platforms/models for generative AI with a CAGR of 96.4%, followed by application development and deployment with a CAGR of 82.7%. While infrastructure / IaaS spending will dominate during the build-out phase, services will take over as the biggest area of investment by 2027.
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