IDC Anticipates $143 Billion Spending on GenAI Solutions by 2027, with 73.3% Annual Growth

IDC forecasts that enterprises will invest $16 billion in GenAI solutions by 2023, with a CAGR of 73.3%, reaching $143 billion by 2027.

Enterprises are projected to invest a staggering $16 billion worldwide on GenAI solutions by 2023.
GenAI has the potential to reshape industries and change the way we work, play, and interact with the world.
GenAI spending is predicted to account for 28.1% of overall AI spending by the end of the forecast period.

According to a new forecast from International Data Corporation (IDC), enterprises are projected to invest a staggering $16 billion worldwide on GenAI solutions by 2023. This includes spending on GenAI software, infrastructure hardware, and IT/business services. The forecast predicts that this investment will reach $143 billion by 2027, with a compound annual growth rate (CAGR) of 73.3% over the forecast period.

Ritu Jyoti, group vice president of Worldwide Artificial Intelligence and Automation market research and advisory services at IDC, emphasizes that GenAI is not just a passing trend or hype, but a transformative technology with significant implications for businesses. With responsible implementation, GenAI has the potential to reshape industries and change the way we work, play, and interact with the world.

IDC expects GenAI investments to follow a natural progression in the coming years, as organizations move from early experimentation to targeted use cases and eventually widespread adoption across various business activities. Additionally, GenAI is expected to extend its use to the edge.

However, Rick Villars, group vice president of Worldwide Research at IDC, highlights that the rate of GenAI spending may be somewhat constrained until 2025 due to challenges in workload shifts and resource allocation. Factors such as pricing, privacy concerns, security issues, and potential consumer antipathy or government interventions could also impact the expected rate of investment.

By the end of the forecast period, GenAI spending is predicted to account for 28.1% of overall AI spending, a significant increase from 9.0% in 2023. GenAI infrastructure, including hardware, Infrastructure as a Service (IaaS), and system infrastructure software (SIS), will be the largest area of investment during the build-out phase. However, GenAI services are expected to surpass infrastructure spending by the end of the forecast period with a five-year CAGR of 76.8%.

The IDC report, titled “GenAI Implementation Market Outlook: Worldwide Core IT Spending for GenAI Forecast, 2023-2027,” provides insights into how organizations will allocate their spending on core IT technology products and services to implement GenAI capabilities within their businesses. More detailed forecasts, including the impact on end devices, network services, and software applications enhanced through GenAI incorporation, will be published in the coming months.

It’s important to note that overall AI spending includes revenue for infrastructure hardware, software, and IT/business services required to implement predictive, interpretive, and generative AI solutions. AI software encompasses application software, platforms/models, and application development and deployment software. AI applications must have a crucial AI component for their functioning, making them AI-centric.

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Background Information

About IDC:

IDC, or International Data Corporation, is a global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. Established in 1964, IDC offers valuable insights into industry trends, market forecasts, and technology adoption through its research and analysis. Their expertise aids businesses, governments, and IT professionals in making informed decisions and strategies.