ChatGPT is trained to follow instructions in a 'prompt' and provide a detailed response. Prompt Engineering is a concept in artificial intelligence (AI), particularly natural language processing (NLP). While this topic has gained much attention, it's merely a sub-sector of the greater AI market upside.
According to the latest worldwide market study by International Data Corporation (IDC), global spending on AI -- including the software, hardware, and services for AI-centric systems -- will reach $154 billion in 2023, that's an increase of 26.9 percent over 2022.
The ongoing incorporation of AI into a wide range of products will result in a compound annual growth rate (CAGR) of 27 percent over the 2022-2026 forecast period, with spending on AI-centric systems expected to surpass $300 billion in 2026.
AI-Centric Systems Market Development
"Companies that are slow to adopt AI will be left behind – large and small. AI is best used in these companies to augment human abilities, automate repetitive tasks, provide personalized recommendations, and make data-driven decisions with speed and accuracy," said Mike Glennon, senior market research analyst at IDC.
According to the IDC assessment, suppliers of AI technologies need to know which are the largest and fastest-growing market opportunities, but without market data, they become just another opinion.
One indicator of how broad spending on AI-centric systems will be over the next five years is that only one of the thirty-six AI use cases identified by IDC will have a CAGR of less than 24 percent over the forecast period.
Three of the leading AI use cases in terms of spending focus on sales and customer service functions: Augmented Customer Service Agents, Sales Process Recommendation and Augmentation, and Program Advisors and Recommendation Systems.
These three use cases will see investment and growth from nearly every industry and combined will account for more than a quarter of all AI spending in 2023.
The other use cases that will see the largest spending this year support a more diverse set of tasks: IT Optimization, Augmented Threat Intelligence and Prevention Systems, and Fraud Analysis and Investigation.
The two industries that will deliver the largest AI investments in 2023 and throughout the forecast are Banking and Retail. The next largest industry for AI spending will be Professional Services followed by Discrete and Process Manufacturing.
Together, these five industries will account for more than half of all spending on AI-centric systems this year. The fastest growth in AI spending will come from the Media industry with a five-year CAGR of 30.2 percent.
However, much like use case spending, only two of the industries in the latest IDC Spending Guide will have CAGRs of less than 25 percent.
AI technology will continue to bring empowering effects to users and industry sectors. With the support of pre-trained large models, multi-modal, and other technologies, AI capabilities will be applied to the whole process of production, promoting the technology from a concept to a large-scale application.
IDC analysts believe that in the future, both government-level urban issues and life issues that are closely related to everyone will enjoy the dividends brought by AI technology and eventually usher in AI for all stakeholders.
Outlook for AI-Centric Systems Applications Growth
From a geographic perspective, the United States will be the largest market for AI-centric systems, accounting for more than 50 percent of all AI spending worldwide throughout the forecast period.
Western Europe will account for more than 20 percent of worldwide IT spending accompanied by a five-year CAGR of 30 percent, one of the fastest growth rates over the forecast period.
The People's Republic of China will be the third-largest AI market with the slowest growth rate, estimated to be at 20.6 percent CAGR.
That said, I anticipate the upside market potential for artificial intelligence will extend beyond the current set of popular use cases. We're merely experiencing the early adopter trends and have yet to explore the mainstream market opportunities that follow.