The forecast from the International Data Corporation (IDC) indicates significant growth in investment in Generative Artificial Intelligence (GenAI) solutions over the coming years.
- Enterprises are expected to invest around $16 billion globally in GenAI solutions by 2023.
- The spending is expected to grow at a Compound annual growth rate (CAGR) of 73.3% from 2023 to 2027, reaching $143 billion by 2027.
The growth rate of GenAI spending is more than twice that of overall AI spending and significantly higher than the CAGR for worldwide IT spending.
The report expects GenAI investments to progress over the next few years, moving from early experimentation to aggressive implementation with specific use cases and eventually becoming widely adopted across various business activities, extending GenAI use to the edge.
Challenges and Constraints
GenAI spending may be constrained through 2025 because of
- Workload shifts
- Resource allocation
- Privacy and security concerns
- Possible consumer or government interventions may further limit spending.
GenAI spending is projected to account for 28.1% of overall AI spending by the end of the forecast period, a significant increase from 9.0% in 2023.
Areas of Investment
During the build-out phase, the focus will be on investing in GenAI infrastructure, including hardware, IaaS, and SIS.
- By the end of the forecast, GenAI services are anticipated to overtake Infrastructure, with a five-year CAGR of 76.8%.
GenAI software segments, such as platforms/models, application development & deployment (AD&D), and applications software, will experience rapid growth over the 2023-2027 forecast period.
In summary, GenAI is expected to experience significant growth in investment over the next few years, with the potential to reshape industries and become a foundational element in enterprises’ digital business control platforms. However, this growth may be subject to various challenges and constraints as the technology evolves.