07 Mar 2023
Worldwide Spending on AI-Centric Systems Forecast to Reach $154 Billion in 2023, According to IDC
NEEDHAM, Mass., March 7, 2023 – A new forecast from the International Data Corporation (IDC) Worldwide Artificial Intelligence Spending Guide shows that global spending on artificial intelligence (AI), including software, hardware, and services for AI-centric systems*, will reach $154 billion in 2023, an increase of 26.9% over the amount spent in 2022. The ongoing incorporation of AI into a wide range of products will result in a compound annual growth rate (CAGR) of 27.0% over the 2022-2026 forecast with spending on AI-centric systems expected to surpass $300 billion in 2026.
"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 with IDC's Customer Insights & Analysis team. "Suppliers of AI technologies need to know which are the largest and fastest growing opportunities, but without data they become just another opinion. IDC's AI Spending Guide provides the foundation for marketing strategy through its comprehensive coverage of AI opportunities and gives a robust basis for a market focus that ties with companies' capabilities."
One indicator of how broad spending on AI-centric systems will be over the next five years is that only one of the 36 AI use cases identified by IDC will have a CAGR of less than 24% 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 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%. However, much like use case spending, only two of the industries in the Spending Guide will have CAGRs of less than 25%.
"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 on a large scale, promoting the technology from the concept to large-scale application of landing, said Xueqing Zhang, senior market analyst with IDC's China Enterprise Research Department. "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."
From a geographic perspective, the United States will be the largest market for AI-centric systems, accounting for more than 50% of all AI spending worldwide throughout the forecast. Western Europe will account for more than 20% of worldwide IT spending accompanied by a five-year CAGR of 30.0%, 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 (20.6% CAGR).
The IDC Worldwide Artificial Intelligence Spending Guide (V1 2023) sizes spending for technologies that analyze, organize, access, and provide advisory services based on a range of unstructured information. The Spending Guide quantifies the AI opportunity by providing data for 36 use cases across 19 industries in nine regions and 32 countries. Data is also available for the related hardware, software, and services categories.
* Taxonomy Note: The IDC Worldwide Artificial Intelligence Spending Guide uses a precise definition of what constitutes an AI Application in which the application must have an AI component that is crucial to the application – without this AI component the application will not function. This distinction enables the Spending Guide to focus on those software applications that are strongly AI Centric. In comparison, the IDC Worldwide Semiannual Artificial Intelligence Tracker uses a broad definition of AI Applications that includes both AI-centric applications and applications where the AI component is non-centric, or not fundamental, to the application. In other words, the application will function without the inclusion of the AI component. This enables the inclusion of vendors that have incorporated AI capabilities into their software, but the applications are not exclusively used for AI functions only.
About IDC Spending Guides
IDC's Spending Guides provide a granular view of key technology markets from a regional, vertical industry, use case, buyer, and technology perspective. The spending guides are delivered via pivot table format or custom query tool, allowing the user to easily extract meaningful information about each market by viewing data trends and relationships.
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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, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC Blog for industry news and insights.
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