IDC predicts that GenAI spending will reach US$143 billion in 2027, with a five-year compound annual growth rate of 73.3%

A new forecast from International Data Corporation (IDC) shows that global enterprises will invest nearly $16 billion in GenAI solutions in 2023. This spending, which includes GenAI software as well as related infrastructure hardware and IT/business services, is expected to reach $143 billion in 2027, with a compound annual growth rate of 73.3% during the 2023-2027 forecast period. This is more than twice the growth rate of overall AI spending and almost 13 times the compound annual growth rate of global IT spending during the same period.

Ritu Jyoti, IDC group vice president for global artificial intelligence and automation market research and consulting services, said: "Generative artificial intelligence (GenAI) is not a fleeting thing. Trend or hype. It is a transformative technology with far-reaching impact and business impact." "Through ethical and responsible deployment, GenAI is poised to reshape industries and change the way we work, play and interact with the world."

IDC expects GenAI investments to evolve over the next few years as organizations transition from early experimentation to actively building targeted use cases to GenAI applications extending to the edge.

Rick Villars, vice president of IDC Global Research Group, pointed out: "By 2025, due to changes in workload and turbulence in resource allocation, GenAI investment will be limited to a certain extent, not only in terms of chips, but also in networks, facilities, model confidence and artificial intelligence skills." "Other factors that may limit expected investment rates include pricing, concerns about privacy and security, and the possibility of a major crisis that triggers consumer revulsion or government intervention."

By the end of the forecast period, GenAI spending will account for 28.1% of overall artificial intelligence spending, significantly higher than this year’s 9.0%. GenAI spending will remain strong beyond the build phase as these solutions become foundational elements of enterprise digital business control platforms.

GenAI infrastructure, including hardware, infrastructure as a service (IaaS) and system infrastructure software (SIS), will be the largest investment area during the build phase. But by the end of the forecast period, GenAI services will gradually surpass infrastructure at a five-year compound annual growth rate of 76.8%. In the 2023-2027 forecast, the GenAI software field will grow the fastest, with a CAGR of 96.4% for GenAI platforms/models, followed by GenAI application development and deployment (AD&D) and application software, with a CAGR of 82.7% .

The IDC report "GenAI Implementation Market Outlook: GenAI Global Core IT Spending Forecast, 2023-2027" provides IDC's preliminary comprehensive global GenAI implementation forecast and when organizations will allocate spending between 2023 and 2027. core IT technology products/services to implement GenAI functions in its business. More detailed forecasts will be released in the coming months, including the impact on end devices, network services and software applications enhanced by the integration of GenAI.

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