Global GenAI investment to surge to $151.1 billion by 2027, says IDC

According to an updated forecast by International Data Corporation (IDC), worldwide investment in Generative AI (GenAI) solutions is predicted to ascend considerably in the coming years.

Businesses are estimated to invest more than $19.4 billion in 2023 on GenAI solutions. This encompasses GenAI software, related infrastructure hardware, and IT/business services.

IDC anticipates that GenAI spending will more than double in 2024 and reach an astonishing $151.1 billion in 2027. This corresponds to a compound annual growth rate (CAGR) of 86.1% over the period 2023 to 2027.

Rick Villars, Group Vice President, Worldwide Research at IDC, stated, "Despite IT headwinds in 2023, businesses accelerated their exploration of GenAI to boost their business transformation."

"In 2024, the shift to AI everywhere will enter a critical buildout phase as businesses make significant new investments to drastically reduce the time and costs associated with customer and employee productivity use cases." Villars foresees the focus will then shift to investments that advance revenue and business outcomes.

IDC forecasts an organic development for GenAI investments in the coming years. It is expected that organisations will move from initial exploration to aggressive infrastructure and trained data model building, eventually reaching widespread adoption with extensions to all business activities' edges.

The IT industry will experience a more substantial and quicker pivot towards AI during this same period, as every company will strive to introduce AI-enhanced products/services and assist customers with AI implementations. It is suggested that for many, AI will supersede the cloud as the principal driver of innovation.

Villars elaborated further on the breakdown of investments during the buildout phase. GenAI infrastructure, including hardware, Infrastructure as a Service (IaaS), and system infrastructure software (SIS), will account for the largest division of investment.

However, GenAI Platform and Application Software are predicted to surpass infrastructure by the conclusion of the forecast period, demonstrating a five-year CAGR of 99.6%. Similarly, GenAI services, consisting of IT and business services, will almost match infrastructure spending by the forecast end with a five-year CAGR of 94.2%.

GenAI spending is projected to constitute 29.0% of total AI spending by the end of the forecast, increasing from 10.8% in 2023. It should sustain its strength well past the buildout phase and become a fundamental component in enterprises' digital business control platforms.

Elucidating on the potential of GenAI, Ritu Jyoti, Group Vice President, Worldwide Artificial Intelligence and Automation market research and advisory services at IDC, said, "Generative AI has served as a catalyst for investments in traditional AI solutions."

"The alliance between traditional and generative AI introduces a myriad of opportunities across diverse industries." Jyoti emphasised that merging traditional AI with generative creativity will result in more adaptable AI systems, facilitating disruptive innovation and offering effective solutions to fluctuating challenges.