Global spending on AI could reach $100 billion by 2024

Wednesday, 26 August, 2020

Global spending on AI could reach $100 billion by 2024

The IDC Worldwide Artificial Intelligence Spending Guide has forecast that global spending on artificial intelligence (AI) will double over the next four years, from US$50.1 billion in 2020 to more than US$100 billion in 2024. Spending on AI systems will accelerate, as organisations deploy artificial intelligence as part of their digital transformation efforts and to remain competitive in the digital economy. The compound annual growth rate (CAGR) for the 2019–2024 period will be 20.1%.

Ritu Jyoti, program vice president, Artificial Intelligence at IDC, predicts that AI technology will help businesses be agile, innovate and scale. “Companies will adopt AI — not just because they can, but because they must. The companies that become ‘AI powered’ will have the ability to synthesise information (using AI to convert data into information and then into knowledge), the capacity to learn (using AI to understand relationships between knowledge and apply the learning to business problems) and the capability to deliver insights at scale (using AI to support decisions and automation),” Jyoti said.

Two of the leading drivers for AI adoption include delivering a better customer experience and helping employees get better at their jobs. This is reflected in the leading use cases for AI, which include automated customer service agents, sales process recommendation and automation, automated threat intelligence and prevention, and IT automation. These four use cases represent nearly a third of all AI spending this year.

The retail and banking industries are predicted to spend the most on AI solutions throughout the forecast, with the retail industry largely focusing its AI investments on improving the customer experience via chatbots and recommendation engines. The banking industry will include spending on fraud analysis and investigation and program advisors and recommendation systems. Discrete manufacturing, process manufacturing and health care comprise the rest of the top five industries for AI spending in 2020. The industries predicted to see the fastest growth in AI spending from 2020–2024 are Media, Federal-Central Government and Professional Services.

Andrea Minonne, senior research analyst, Customer Insights & Analysis, said the COVID-19 pandemic slowed AI investments across the transportation, personal and consumer services industries, which include leisure and hospitality businesses. Minonne predicts that these industries will be cautious with AI investments in 2020, focusing instead on cost containment and revenue generation.

“On the other hand, AI has played a role in helping societies deal with large-scale disruptions caused by quarantines and lockdowns. Some European governments have partnered with AI start-ups to deploy AI solutions to monitor the outcomes of their social distancing rules and assess if the public was complying with rules. Also, hospitals across Europe are using AI to speed up COVID-19 diagnosis and testing, to provide automated remote consultations and to optimise capacity at hospitals,” Minonne said.

Stacey Soohoo, research manager, Customer Insights & Analysis, noted that the Artificial Intelligence Spending Guide was adjusted for the impact of COVID-19. Soohoo acknowledged that the pandemic caused supply chain disruptions and store closures with continued impact expected to linger into 2021 and the outyears. For the most impacted industries, this has caused delays in AI deployments.

“Elsewhere, enterprises have seen a silver lining in the current situation: an opportunity to become more resilient and agile in the long run. Artificial intelligence continues to be a key technology in the road to recovery for many enterprises, and adopting artificial intelligence will help many to rebuild or enhance future revenue streams and operations,” Soohoo said.

Software and services will comprise more than one-third of all AI spending this year, with hardware delivering the remainder. The largest share of software spending will go to AI applications (US$14.1 billion) while the largest category of services spending will be IT services (US$14.5 billion). Servers (US$11.2 billion) will dominate hardware spending, with software forecast to increase the most in spending, with a five-year CAGR of 22.5%.

Geographically, the United States will deliver more than half of all AI spending, led by the retail and banking industries. Western Europe will be the second-largest geographic region, led by banking, retail and discrete manufacturing. China will be the third-largest region for AI spending with state/local government, banking and professional services as the leading industries. Japan will have the strongest spending growth over the five-year forecast, with a 32.1% CAGR, and Latin America a 25.1% CAGR.

Image credit: ©

Related News

Multi-cloud environments bring new security threats

More than half of Australian businesses surveyed by Thales are finding it harder to manage...

Google Cloud announces three new regions

Google Cloud has announced three new regions to meet growing demand for cloud services in...

Support for ESG strategies launched

A new ESG management solution aims to provide Australian brands with support for their evolving...

  • All content Copyright © 2022 Westwick-Farrow Pty Ltd