Publication date: 22 Oct 2024
European Spending on Artificial Intelligence to Reach $133 Billion by 2028, According to a New IDC Spending Guide
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For more information, contact:- Carla La Croce (clacroce) Email: clacroce@idc.com Phone number: +39 02 28457347
- Marco Tennyson Email: mtennyson@idc.com Phone number: +39 02 28457.1
MILANO, October 24, 2024 — According to a new forecast from the Worldwide AI and Generative AI Spending Guide published by International Data Corporation (IDC), European spending on artificial intelligence (AI) is projected to reach $133 billion by 2028, growing at a compound annual growth rate (CAGR) of 30.3% over the 2024–2028 forecast period.
The IDC AI technology scope also includes generative AI (GenAI) solutions, which have been capturing significant attention since late 2022. “While artificial intelligence itself is not new, the acceleration in AI adoption is largely driven by the attention surrounding generative AI,” says Carla La Croce, research manager, Data and Analytics at IDC. “GenAI adoption is moving swiftly from early testing and experimentation to more integrated business solutions. The CAGR for GenAI is expected to be 55% over the forecast period, significantly higher than that of more established AI technologies.”
According to IDC’s Future Enterprise Resiliency & Spending Survey (Wave 7, July 2024), approximately 40% of European companies are making significant investments in GenAI, with plans to invest in training, GenAI-enhanced software, and consulting services over the next 18 months. Additionally, 30% of companies have already deployed GenAI-enhanced applications and services in production environments.
From a technology perspective, software will be the largest category of AI spending, accounting for around 58% of overall investments and continuing to grow throughout the forecast period. Initially, applications and platforms will represent the majority of software spending; however, by 2028, AI platforms will dominate, enabling end users to develop more customized solutions in response to increasing demand for tailored products. Services will be the second-largest and fastest-growing category, followed by hardware. European investments in infrastructure-as-a-service (IaaS), servers, and storage are expected to be lower than those in the U.S., as major infrastructure providers are located outside Europe.
The financial services sector is expected to lead in AI spending over the forecast period, with banking at the forefront, accounting for more than 23% of total AI investments. Other major industries for AI spending include retail and software/information services. Media and entertainment will be the fastest-growing sector, with a CAGR exceeding 33%, driven by the adoption of GenAI solutions for customer-centric use cases such as guided selling. Additionally, healthcare, life sciences, and retail will record above-average growth rates, with CAGRs exceeding 30% over the forecast period.
Security-related use cases, such as augmented fraud analysis and investigation and augmented threat intelligence and prevention, will attract significant investment, with 8.7% and 8.5% of AI spending in 2024, respectively. AI infrastructure provisioning and customer-focused areas, such as AI-enabled customer service and self-service, will be other areas of strong investment. Smaller but fast-growing customer-centric use cases include digital commerce and augmented professional growth and development, underscoring the emphasis on employee skills development. Augmented claims processing, particularly in the insurance sector, will also be a key focus area.
About IDC Spending Guides
IDC's spending guides provide a comprehensive view of key technology markets from a regional, industry, use case, buyer, and technology perspective. Delivered in pivot table format or via a custom query tool, the spending guides enable users to easily extract meaningful insights on market trends and relationships.
About IDC
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,300 analysts worldwide, IDC offers global, regional, and local expertise on technology, IT benchmarking and sourcing, and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the world's leading tech media, data, and marketing services company. To learn more about IDC in Europe, please visit https://www.idc.com/eu. Follow IDC Europe on X at @IDC EMEA and LinkedIn. Subscribe to the European IDC Blog for industry news and insights.