IDC expects genAI spending to double in these areas in '24

In 2023, companies globally invested roughly $19.4 billion in generative artificial intelligence (genAI) technology, according to data from market research firm IDC. The investment figure is slated to double in 2024 and reach an unprecedented $151.1 billion by 2027. This would indicate a rapid compound yearly growth rate of 85.9% from 2023 to 2027. Despite the challenges identified by IT departments in 2023, businesses ramped up their adoption of genAI to facilitate business transformation.

Rick Villars, Group Vice President at IDC, stated that 2024 would witness an important phase of buildout as businesses invest extensively in genAI aiming to bring down customer and employee productivity costs and timelines significantly. In time, the emphasis will move onto investments that enhance revenue and business outcomes.

Forrester Group, another research firm, equated genAI’s shoot to the top with pivotal moments like the advent of social media, the internet, and smartphones. IDC estimates that genAI will claim 29% of total artificial intelligence spending by 2027 recording a significant surge from 10.8% in 2023. GenAI investments are set to persist and grow, becoming integral to enterprises' digital business control platforms.

By 2030, genAI spending for general use cases including tools for summarizing, writing, and research is estimated to reach $42 billion per annum. For applications specifically designed to improve productivity and stimulate automation, especially in health, security, and content marketing sectors, the annual spending could reach $79 billion.

Over 50% of the generalized use case spending will be geared towards communication and chatbot platforms, expected to enhance both employee and customer experience enormously. The transition towards AI will be quicker and of a larger amplitude in the IT industry. IDC believes that AI could potentially succeed the cloud as the innovation instigator.

66% of business heads stated that their organization has implemented private, safe genAI tools for their employees. Likewise, 65% reported that their department has been tasked with identifying use cases in their organizations.

During the build-out phase, the largest portion of investment will go towards genAI Infrastructure, which includes hardware, Infrastructure as a Service (IaaS), and system infrastructure software (SIS), as per IDC's report. But by 2027 end, genAI Platform and Application Software are predicted to surpass infrastructure investments with a five-year CAGR of 99.1%.

Ritu Jyoti, IDC’s group vice president for Worldwide Artificial Intelligence and Automation services, noted that traditional AI investments have been positively influenced by generative AI, creating numerous possibilities across different sectors. According to Jyoti, the successful integration of traditional AI and creative generative AI can pave the way for versatile AI systems that can meet evolving challenges and foster disruptive innovation.