New IT investment is aligned with digital business growth. The rapid adoption of Artificial Intelligence (AI) technologies has become a key growth catalyst across many industries.
The latest growth forecast from IDC provides a compelling snapshot of the AI market's upward trajectory and underscores its pivotal role in shaping the future of business innovation.
Worldwide spending on AI will more than double by 2028, reaching $632 billion. This represents a compound annual growth rate (CAGR) of 29 percent over the 2024-2028 forecast period.
Such rapid adoption is a clear indicator of AI's increasing importance and the willingness of business leaders to invest heavily in the strategic use cases that fuel net-new growth.
Artificial Intelligence Market Development
"AI-powered transformations have delivered tangible business outcomes and value for organizations worldwide and they are building their AI strategies around employee experience, customer engagement, business process, and industry innovations," said Ritu Jyoti, group vice president at IDC.
The United States is poised to remain as the dominant enterprise investor in the AI market, with spending expected to reach $336 billion by 2028, accounting for more than half of all global AI investments.
Perhaps the most intriguing aspect of this forecast is the explosive growth projected for Generative AI (GenAI). While currently representing a smaller portion of overall AI spending, GenAI is set to outpace the broader AI market with a five-year CAGR of 59.2 percent.
By 2028, GenAI spending is expected to reach $202 billion, constituting 32 percent of overall AI expenditures. This rapid ascent reflects the immense potential and widespread C-suite excitement surrounding GenAI tool use cases.
From an industry perspective, the Financial Services sector is leading the charge in AI adoption, projected to account for more than 20 percent of all AI spending over the forecast period.
This is not surprising given the fintech sector's data-intensive nature and the potential for AI to transform risk assessment, fraud detection, and create personalized financial services.
Interestingly, the forecast also highlights the diverse range of AI applications across industries. Thirty of the 42 AI use cases identified by IDC are expected to see five-year CAGRs greater than 30 percent.
This broad-based growth suggests AI's impact will be felt across numerous sectors and business functions, from customer service and sales to IT operations and digital commerce.
Several key trends emerged from this latest forecast:
- As AI become more accessible, we can expect to see increased adoption among small and medium-sized enterprises. This will create new market opportunities for AI solution providers and advisory consultants specializing in AI strategy development.
- With different sectors showing varying rates of AI adoption, there's a huge opportunity for more tailored, industry-specific AI solutions. Developers of AI applications that address unique sectoral requirements will experience significant demand.
- As AI spending grows, so too will the need for AI infrastructure and related services. This presents opportunities for cloud computing providers, hardware manufacturers, and IT services firms specializing in AI deployment and management.
- With the rapid proliferation of AI, particularly GenAI, there will be an increasing focus on ethics and governance. This creates opportunities for consultancies and software vendors specializing in AI policies, bias detection, and regulatory compliance.
- The growth in AI spending will lead to another surge in demand for AI talent. This presents opportunities for educational institutions, training providers, and HR tech companies to develop AI-focused curricula and talent management solutions.
- As AI becomes pervasive, we'll see more applied-AI augmentation of human workers. This growth trend will create opportunities for solutions that optimize human-AI collaboration.
Outlook for Artificial Intelligence Investment Strategies
The IDC forecast paints a picture of a significant AI market with diverse and far-reaching implications. As AI technologies continue to mature and proliferate, they will undoubtedly reshape industries, create new business models, and drive unprecedented innovation.
For business leaders the overarching message is clear: AI is not just the future – it's the present, so now is the time for decisive leadership to act. Those leaders who can successfully deploy competitive AI solutions will be well-positioned to thrive in the years to come.
That said, skilled and experienced talent who can drive strategic use cases to a desired business outcome conclusion will be the key gating factor. Today, there are already too few accomplished practitioner candidates available to hire as leaders for new GenAI projects.