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A new report from the International Data Corporation (IDC) has predicted a sharp rise in global artificial intelligence (AI) spending in the coming years driven by a combination of factors for the emerging technology.
The report, dubbed “Worldwide AI and Generative AI Spending Guide,” forecasts that global AI spending will reach $632 billion by 2028, nearly doubling its present figures. The forecast pegs the compound annual growth rate (CAGR) until 2028 at 29%, with generative AI touted to be the biggest growth driver.
The IDC notes that the meteoric rise of generative AI systems over the last 24 months will show no signs of slowing down amid rising adoption rates by enterprises. Despite firms spending on generative AI systems, the report surmises that the segment will be “less than the combined total” of other segments.
According to the report, spending on machine learning, natural language processing (NLP), and deep learning is expected to record a spike during the forecast period but will play second fiddle to generative AI’s CAGR of 59.2%.
A general view of the IDC’s predictions reveals that most firms embracing AI will deploy a significant part of their capital for software. IDC analysts opine that software will be the largest spending category, with AI-enabled applications and AI System Infrastructure receiving the most attention.
Hardware AI spending will take second place with firms deploying funds for servers and storage solutions, giving it a CAGR of just 24.3% over five years.
Financial services are expected to be the largest adopters of AI technology, closely followed by the IT and retail sectors. The combination of the top three industries is predicted to make up 45% of AI spending during the forecast period, while leisure and personal services are expected to record spending running into billions of dollars.
In terms of regional distribution, North America, led by the U.S., will record over $336 billion in AI spending in 2028, with Western Europe occupying second place in the grand scheme of things. While Africa and the Middle East are expected to show promise, the report touts the Asia-Pacific to have the third-largest AI spending growth spurt by 2028.
Wary of the downsides
For all the heavy spending on AI by enterprises, there are palpable fears that the integration of the technology could change the face of the modern workplace in the near future. An IBM (NASDAQ: IBM) report predicts that up to 1.4 billion workers will be adversely affected by generative artificial intelligence, triggering a wave of job losses.
Developed economies with advanced integrations of emerging technologies are predicted to bear the brunt of AI-induced job losses, while emerging economies and less-developed regions will record low-level losses. However, optimists opine that upskilling employees with new AI capabilities will give them an edge in a changing workplace.
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