IDC: Led by U.S., Global AI Spending Will More than Double by 2024

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Those predicting another “AI winter” will have a quarrel on their hands with industry analyst firm International Data Corp., which forecasts global spending on AI will more than than double over the next four years, from $50.1 billion in 2020 to more than $110 billion in 2024.

According to IDC’s Worldwide Artificial Intelligence Spending Guide, AI systems spending will speed up at a 20.1 percent CAGR over the next several years “as organizations deploy artificial intelligence as part of their digital transformation efforts and to remain competitive in the digital economy,” IDC said.

“Companies will adopt AI — not just because they can, but because they must,” said Ritu Jyoti, program VP, AI at IDC. “AI is the technology that will help businesses to be agile, innovate and scale. The companies that become ‘AI powered’ will have the ability to synthesize 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).”

The findings are in line with other analysts’ forecasts, including those of HPC industry analyst firms Hyperion Research and Intersect360, both of whom have cited in their recent HPC market updates the convergence of AI and supercomputing as a key driver of HPC industry growth in coming years.

Software and services will each account for a little more than one third of all AI spending this year with hardware delivering the remainder, according to IDC. The largest share of software spending will go to AI applications ($14.1 billion) while the largest category of services spending will be IT services ($14.5 billion). Servers ($11.2 billion) will dominate hardware spending. Software will see the fastest growth in spending over the forecast period with a five-year CAGR of 22.5 percent.

Geographically, the U.S. will deliver more than half of all AI spending throughout the forecast, IDC said. Western Europe will be the second largest region, China third. The strongest spending growth over the five-year forecast will be in Japan (32.1 percent CAGR) and Latin America (25.1 percent CAGR).

According to IDC, leading AI use cases are in the areas of customer experience and augmenting employees in their work roles. “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,” IDC reported. Combined, the firm said, “these four use cases will represent nearly a third of all AI spending this year. Some of the fastest growing use cases are automated human resources, IT automation and pharmaceutical research and discovery.”

IDC said the two industries that will spend the most on AI this year are retail, primarily on customer service, and banking, primarily on fraud analysis and investigation, along with program advisors and recommendation systems. The firm said discrete manufacturing, process manufacturing and healthcare will round out the top five industries for AI spending in 2020.

The industries that will see the fastest growth in AI spending over the 2020-2024 forecast are media, federal/central Government and professional services.

“COVID-19 caused a slowdown in AI investments across the transportation industry as well as the personal and consumer services industry, which includes leisure and hospitality businesses,” said Andrea Minonne, senior IDC research analyst, Customer Insights & Analysis. “These industries will be cautious with their AI investments in 2020 as their focus will be on cost containment and revenue generation, rather than innovation or digital experiences. 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 optimize capacity at hospitals.”