Worldwide Spending on AI Systems Will Be Nearly $98 Billion in 2023: IDC

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  • Spending on AI systems will be led by the retail and banking industries
  • Hardware spending will be somewhat larger than software spending in 2019
  • The US will deliver more than 50 percent of all AI spending throughout the forecast period

Global spending on artificial intelligence (AI) systems is expected to maintain its strong growth trajectory as businesses continue to invest in projects that utilize the capabilities of AI software and platforms.

According to the recently updated International Data Corporation (IDC) Worldwide Artificial Intelligence Systems Spending Guide, spending on AI systems will reach $97.9 billion in 2023, more than two and a half times the $37.5 billion that will be spent in 2019.

The compound annual growth rate (CAGR) for the 2018-2023 forecast period will be 28.4 percent.

“The AI market continues to grow at a steady rate in 2019 and we expect this momentum to carry forward,” said David Schubmehl, research director, Cognitive/Artificial Intelligence Systems at IDC.

“The use of artificial intelligence and machine learning (ML) is occurring in a wide range of solutions and applications from ERP and manufacturing software to content management, collaboration and user productivity. Artificial intelligence and machine learning are top of mind for most organizations today, and IDC expects that AI will be the disrupting influence changing entire industries over the next decade,” he explained.

Retail and banking industries to spend more on AI

According to the new IDC spending guide, spending on AI systems will be led by the retail and banking industries, each of which will invest more than $5 billion in 2019.

Nearly half of the retail spending will go toward automated customer service agents and expert shopping advisors & product recommendation systems. The banking industry will focus its investments on automated threat intelligence and prevention systems and fraud analysis and investigation.

Other industries that will make significant investments in AI systems throughout the forecast include discrete manufacturing, process manufacturing, healthcare, and professional services. The fastest spending growth will come from the media industry and federal/central governments with five-year CAGRs of 33.7 percent and 33.6 percent respectively.

Largest AI use cases

“Artificial Intelligence (AI) has moved well beyond prototyping and into the phase of execution and implementation,” noted Marianne D’Aquila, research manager, IDC Customer Insights & Analysis.

Investments in AI systems continue to be driven by a wide range of use cases. The three largest use cases – automated customer service agents, automated threat intelligence and prevention systems, and sales process recommendation and automation – is anticipated to deliver 25 percent of all spending in 2019.

The use cases that will see the fastest spending growth over the 2018-2023 forecast period are automated human resources (43.3 percent CAGR) and pharmaceutical research and development (36.7 percent CAGR).

Hardware spending will be somewhat larger than software spending in 2019 as firms build out their AI infrastructure, but purchases of AI software and AI software platforms will overtake hardware by the end of the forecast period with software spending seeing a 36.7 percent CAGR.

Top AI spending on geographic basis

The United States will deliver more than 50 percent of all AI spending throughout the forecast period, led by the retail and banking industries.

Western Europe will be the second largest geographic region, led by banking and discrete manufacturing. China will be the third largest region for AI spending with retail, state/local government and professional services vying for the top position.

The strongest spending growth over the five-year forecast will be in Japan (45.3 percent CAGR) and China (44.9 percent CAGR).

Longjam Dineshwori

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