IDC: Spending on GenAI Solutions Will Reach $143 Billion in 2027 with a Five-Year Compound Annual Growth Rate of 73.3%
October 20, 2023 | IDCEstimated reading time: 1 minute
A new forecast from International Data Corporation (IDC) shows that enterprises will invest nearly $16 billion worldwide on GenAI solutions in 2023. This spending, which includes GenAI software as well as related infrastructure hardware and IT/business services, is expected to reach $143 billion in 2027 with a compound annual growth rate (CAGR) of 73.3% over the 2023-2027 forecast period. This is more than twice the rate of growth in overall AI spending* and almost 13 times greater than the CAGR for worldwide IT spending over the same period.
"Generative AI is more than a fleeting trend or mere hype. It is a transformative technology with far-reaching implications and business impact," says Ritu Jyoti, group vice president, Worldwide Artificial Intelligence and Automation market research and advisory services at IDC. "With ethical and responsible implementation, GenAI is poised to reshape industries, changing the way we work, play, and interact with the world."
IDC expects GenAI investments to follow a natural progression over the next several years as organizations transition from early experimentation to aggressive build out with targeted use cases to widespread adoption across business activities with an extension of GenAI use to the edge.
"The rate of GenAI spending will be somewhat constrained through 2025 due to turbulence in workload shifts and resource allocation, not just in silicon but also in networking, facilities, model confidence, and AI skills," noted Rick Villars, group vice president, Worldwide Research at IDC. "Other factors that might constrain the expected rate of investment include pricing, concerns about privacy and security, and the possibility of an existential crisis that triggers major consumer antipathy or government interventions."
By the end of the forecast, GenAI spending will account for 28.1% of overall AI spending, up significantly from 9.0% in 2023. GenAI spending will remain strong well beyond the build out phase as these solutions become a foundational element in enterprises' digital business control platforms.
GenAI infrastructure, including hardware, Infrastructure as a Service (IaaS), and system infrastructure software (SIS), will represent the largest area of investment during the build out phase. But GenAI services will gradually overtake infrastructure by the end of the forecast with a five-year CAGR of 76.8%. The GenAI software segments will see the fastest growth over the 2023-2027 forecast with GenAI platforms/models delivering a CAGR of 96.4% followed by GenAI application development & deployment (AD&D) and applications software with an 82.7% CAGR.
Suggested Items
America Projected to Triple Semiconductor Manufacturing Capacity by 2032, the Largest Rate of Growth in the World
05/08/2024 | SIAThe Semiconductor Industry Association (SIA), in partnership with the Boston Consulting Group (BCG), released a report on the global chip supply chain that projects the United States will triple its domestic semiconductor manufacturing capacity from 2022—when the CHIPS and Science Act (CHIPS) was enacted—to 2032.
Real Time with… IPC APEX EXPO 2024: The Driving World of e-Mobility with Indium
05/08/2024 | Real Time with...IPC APEX EXPOIn the competitive EV market, technology plays a crucial role facing the challenges of infrastructure. As Brian O'Leary explains, Indium's e-Mobility product suite includes proven solder and thermal management products for high reliability.
Incap Releases Unaudited Business Review for January–March 2024
05/08/2024 | IncapRevenue for the first quarter 2024 amounted to EUR 51.4 million (1–3/2023: EUR 72.2 million). Year-on-year the revenue decreased 29.3%, as expected.
Schweizer Electronic: Business Development in Q1 2024
05/08/2024 | Schweizer Electronic AGThe sales of the SCHWEIZER Group amounted to EUR 39.2 million in the first quarter of 2024 (Q1 2023: EUR 37.1 million). This corresponds to an increase of +5.5 percent compared to the same quarter of the previous year.
Key Tronic Announces Results for Q3 of Fiscal Year 2024
05/08/2024 | Globe NewswireFor the third quarter of fiscal year 2024, Key Tronic reported total revenue of $140.5 million, compared to $164.6 million in the same period of fiscal year 2023.