Report: Gen AI spending To Hit $143 Billion by 2027
Spending for generative AI technology is poised to explode over the next four years, with a five-year compound annual growth rate (CAGR) of 73.3%.
Market intelligence firm International Data Corporation (IDC) has forecasted that the total spending on gen AI will reach $143 Billion by 2027, a massive jump from the projected $16 billion for 2023. The spending encompasses GenAI software, related hardware and IT/business services, with the largest areas of growth over the next two years coming from hardware, Infrastructure-as-a-Service and system infrastructure software.
"Generative AI is more than a fleeting trend or mere hype. It is a transformative technology with far-reaching implications and business impact," said 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."
The group's findings, found in the "GenAI Implementation Market Outlook: Worldwide Core IT Spending for GenAI Forecast, 2023–2027" report (pay walled), found that overall spending in the market will gradually increase as organizations and enterprises move from "early experimentation to aggressive build out."
IDC said it expects spending to stay somewhat "constrained" through 2025 due to many factors, including resource allocation, IT's current lack of gen AI skills, privacy and security concerns and initial price tag shock. However, by the end of 2027, IDC forecasts that GenAI will account for 28.1% of all AI-related spending -- up from 2023's projected 9%.
Once the industry has moved from early experimentation, IDC forecasts that the largest sectors of spending will come from gen AI services, which will have a five-year CAGR of 76.8%, and gen AI software, with a massive five-year CAGR of 96.4%.