Worldwide AI spending expected to reach $110 billion in 2024

Head with binary code inside it made to look like artificial intelligence
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Global spending on artificial intelligence (AI) is forecast to double over the next four years, growing from $50.1 billion in 2020 to more than $110 billion in 2024, says the International Data Corporation’s (IDC) Worldwide Artificial Intelligence Spending Guide.

Spending on AI systems will accelerate as businesses deploy AI as part of their digital transformation efforts. Per the IDC, the compound annual growth rate (CAGR) for the 2019-2024 period will come in at 20.1%.

The leading drivers for AI adoption include delivering better customer experiences while also helping employees improve overall job performance. The IDC says this is reflected in the leading use cases for AI, including automated customer service agents, sales process recommendation and automation, automated threat intelligence and prevention, and IT automation. Combined, the IDC claims these four use cases will represent nearly a third of all AI spending in 2020.

IDC predicts that the retail and banking industries will spend the most on AI solutions throughout the forecast. While the retail sector will likely set its sights on AI investments to improve customer experiences through chatbots and recommendation engines, the banking industry is likely to focus its spending on fraud analysis and investigation, program advisors and recommendation systems.

Meanwhile, software and services will each account for just over a third of all AI spending this year with hardware accounting for the remainder. The IDC says the largest share of software spending will go to AI applications, amounting to $14.1 billion.

The largest category of services spending, however, will be in IT services. The IDC predicts spending will ring in at $14.5 billion. Though servers will dominate overall spending, the IDC says software will experience the fastest growth in spending with a five-year CAGR of 22.5%.

Geographically, the IDC says the most vigorous spending growth over the five-year forecast will be in Japan (32.1% CAGR) and Latin America (25.1% CAGR). However, half of all AI spending throughout the forecast will be spent by the US with Western Europe trailing closely.

For some organizations, the spread of the coronavirus impacted AI deployments. However, Stacey Soohoo, research manager and customer insights & analysis for the IDC, says the current situation also presented an opportunity for others to become more resilient and agile.

"In the short term, 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 some delays in AI deployments,” said Soohoo.

“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."