In uncertain times, such as the post-pandemic economy, smart business leaders will consistently invest the time and effort to gain a competitive edge. Moreover, these savvy leaders have a keen sense of the need for ongoing digital transformation.
The worldwide artificial intelligence (AI) market -- including software, hardware, and services -- will post a compound annual growth rate (CAGR) of 18.6 percent in the 2022-2026 forecast period to reach $900 billion in 2026, according to the latest market study by International Data Corporation (IDC).
"The COVID-19 pandemic quickly revealed that our current systems are not as resilient as we thought they were," says Martin Nuska, AI analyst at IDC.
Artificial Intelligence Market Development
The quest for substantive digital transformation became an urgent necessity, due to disrupted supply chains, and a critical need for fast and accurate insight to support key decision-making processes.
This is expected to lead to huge opportunities for AI in the future, spanning used cases such as improved response to unpredictable events, improved shipping and asset management, faster and broader analysis of healthcare systems, and image and video recognition in areas like security and eCommerce.
To get through the current crises that were triggered by the war in Ukraine -- energy, food supply, security, and inflation -- building resilient systems is essential, and solutions will depend on applied AI.
In Europe the Middle East, and Africa (EMEA), the total value of the AI market will exceed $200 billion in 2026. It will break through the $100 billion mark in 2023 and will then double over the following three years.
Services will remain the fastest growing category, with a CAGR of 27.4 percent. Software grew substantially slower in EMEA, with a CAGR of 17.5 percent, while the hardware forecast CAGR is 15.4 percent.
On an individual country basis, Germany's AI markets are projected to have the highest growth rate in the region over the forecast period, followed by the UK and France.
According to the IDC assessment, Germany's market has the best advantage of strong investment from the government in AI research and development.
On the other end of the spectrum, the Russian AI market is expected to grow much slower, due to the impact of sanctions as a response to the unprovoked war in Ukraine.
In the software segment, public cloud-based solutions are expected to mature faster than on-premise and private cloud deployments, taking a greater portion of total AI investments.
Outlook for Artificial Intelligence Apps Growth
By 2026, AI software in Europe is expected to represent almost 60 percent of total AI revenues. In the Middle East and Africa, this software will claim just over 50 percent of AI market value.
The fastest-growing segment in EMEA over the forecast period will be SaaS AI platforms, while server and storage will post slower growth, followed by AI system infrastructure software (reduced growth from 2024 onwards).
That said, I believe we'll see the more progressive organizations apply SaaS AI solutions within employee and customer experience decision-making scenarios. Human intelligence augmentation, rather than human resource displacement, is the most likely and compelling enterprise IT use case.
Knowledge worker and frontline employee productivity innovation via SaaS AI are already gaining momentum across the globe in 2022, and this will continue into the foreseeable future. It's inevitable.