'The Future for Business is AI' Analysts Predict, As Worldwide Spending Surges

Over the next three years, spending on artificial intelligence (AI) technologies in the U.S. will grow to $120 billion, say researchers at industry analyst firm International Data Corporation (IDC), and companies failing to take advantage of this tech will lose a significant competitive advantage.

"The greatest potential benefit for the use of AI remains its use in developing new business, and building new business models," said Mike Glennon, senior research manager with IDC's Customer Insights & Analysis team, in a statement. "However, existing businesses are hesitant to embrace this potential, leaving the greatest opportunities to new market entrants that have no fear of change and can adapt easily to new ways of conducting business. The future for business is AI and those companies that can seize this opportunity could easily become the new giants."

According to the authors of IDC's just published Worldwide Artificial Intelligence Spending Guide, spending on AI in the U.S. will hit a compound annual growth rate (CAGR) of 26.0% over the 2021-2025 forecast period. All 19 U.S. industries profiled in the IDC report are forecast to deliver AI spending growth of 20% or more. The U.S. also accounts for more than half of all AI spending worldwide, the report's authors found.

The Worldwide Artificial Intelligence Spending Guide examines the "AI systems opportunity" from four perspectives: use case, technology, industry, and geography. The results were compiled via IDC's Customer Insights query tool, which was designed to allow the user to easily extract meaningful information about the AI tech market by viewing data trends and relationships and making data comparisons.

Among the 30 AI use cases included in the Spending Guide, two will are expected to remain the largest in terms of total spending throughout the forecast period: "Augmented Customer Service Agents" and "Sales Process Recommendation and Augmentation." Together, these two use cases will account for more than 20% of all AI spending in the U.S. in 2025, the analysts forecast. Two other use cases ("Public Safety and Emergency Response" and "Augmented Claims Processing") will have five-year CAGRs greater than 30%, while another use case ("IT Optimization") will become the third largest AI use case in 2025 with a CAGR of 29.7%.

The fastest growth in AI spending will be seen in Professional Services, Media, and Securities and Investment Services, according to the report's authors, all of which will have CAGRs greater than 30%. But Retail will continue to be the largest U.S. industry for AI spending throughout the forecast. "Augmented Customer Service Agents," and "Expert Shopping Advisors and Product Recommendations" are the two retail use cases likely to receive the most investment, according to the report. These two use cases "encourage and assist increased spending by retail customers" and account for nearly 40% of AI spending in the industry. The shift to online shopping contributes considerably to the adoption of AI within retail, the analysts noted.

Banking will be a close second, with AI spending in this sector spreading across several different functional areas, including customer service ("Program Advisors and Recommendation Systems"), operations ("Fraud Analysis and Investigation"), and security ("Augmented Threat Intelligence and Prevention Systems").

Together, Banking and Retail, represent nearly 28% of all AI spending in the United States in 2025 and will account for nearly $20 billion of the amount added to the U.S. total over the forecast.

The IDC spending guide covers 9 regions, 32 countries, 19 industries, 30 use cases, and 10 technology categories, including hardware and software.

About the Author

John K. Waters is the editor in chief of a number of sites, with a focus on high-end development, AI and future tech. He's been writing about cutting-edge technologies and culture of Silicon Valley for more than two decades, and he's written more than a dozen books. He also co-scripted the documentary film Silicon Valley: A 100 Year Renaissance, which aired on PBS.  He can be reached at