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Artificial Intelligence Technology Investment will Double

According to the latest findings in the BCG report, "The Most Innovative Companies 2019" -- savvy business leaders are the early adopters of artificial intelligence (AI). "All of the ten highest-ranking companies -- and many in the top 50 -- use AI, platforms, and ecosystems to enable themselves and others to pursue new products, services, and ways of working."

Worldwide spending on AI systems is forecast to reach $35.8 billion in 2019 -- that's an increase of 44 percent over the amount invested in 2018. International Data Corporation (IDC) expects spending on AI systems will more than double to $79.2 billion in 2022 with a compound annual growth rate (CAGR) of 38 percent over the 2018-2022 forecast period.

Artificial Intelligence Market Develpment

Global spending on AI systems will be led by the retail industry where companies will invest $5.9 billion this year on solutions such as automated customer service agents and expert shopping advisors & product recommendations.

Banking will be the second largest industry with $5.6 billion going toward AI-enabled solutions including automated threat intelligence & prevention systems and fraud analysis & investigation systems. Discrete manufacturing, healthcare providers, and process manufacturing will complete the top 5 industries for AI systems spending this year.

The industries that will experience the fastest growth in AI systems spending over the 2018-2022 forecast are federal or central government (44.3 percent CAGR), personal and consumer services (43.3 percent CAGR), and education (42.9 percent CAGR).

"Significant worldwide artificial intelligence systems spend can now be seen within every industry as AI initiatives continue to optimize operations, transform the customer experience, and create new products and services", said Marianne Daquila, research manager at IDC.

This is evidenced by use cases, such as intelligent process automation, expert shopping advisors & product recommendations, and pharmaceutical research and discovery exceeding the average five-year compound annual growth of 38 percent. The continued advancement of AI-related technologies will drive double-digit year-over-year spend into the next decade.

The AI use cases that will see the most investment this year are automated customer service agents ($4.5 billion worldwide), sales process recommendation and automation ($2.7 billion), and automated threat intelligence and prevention systems ($2.7 billion).

According to the IDC assessment, five other use cases will see spending levels greater than $2 billion in 2019: automated preventative maintenance, diagnosis and treatment systems, fraud analysis and investigation, intelligent process automation, and program advisors and recommendation systems.

Enterprise software will be the largest area of AI systems spending in 2019 with nearly $13.5 billion going toward AI applications and AI software platforms. AI applications will be the fastest growing category of AI spending with a five-year CAGR of 47.3 percent.

Hardware spending, dominated by servers, will be $12.7 billion this year as companies continue to build out the infrastructure necessary to support AI systems. Companies will also invest in IT services to help with the development and implementation of their AI systems and business services such as consulting and horizontal business process outsourcing related to these systems.

By the end of the forecast period, AI-related services spending will nearly equal hardware spending. Across the globe, there is a significant upside opportunity for vendors to focus more on professional services.

Outlook for AI Market Adoption Growth

On a geographic basis, the United States will deliver nearly two thirds of all spending on AI systems in 2019, led by the retail and banking industries. Western Europe will be the second largest region in 2018, led by banking, retail, and discrete manufacturing.

The strongest spending growth over the five-year forecast will be in Japan (58.9 percent CAGR) and Asia-Pacific (excluding Japan and China) (51.4 percent CAGR). China will also experience strong spending growth throughout the forecast (49.6 percent CAGR).

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