Global GenAI spend will reach $143bn in 2027

IDC predicts enterprises will invest nearly $16bn globally in 2023

The GenAI train is going full steam ahead as global spending is predicted to thrive.

According to a new forecast from IDC, enterprises will invest nearly $16bn worldwide on GenAI solutions in 2023.

This spending, which includes GenAI software as well as related infrastructure hardware and IT/business services, is expected to reach $143bn in 2027 with a compound annual growth rate (CAGR) of 73.3 per cent over the 2023-2027 forecast period.

This is more than twice the rate of growth in overall AI spending and almost 13 times greater than the CAGR for worldwide IT spending over the same period.

"Generative AI is more than a fleeting trend or mere hype. It is a transformative technology with far-reaching implications and business impact," said Ritu Jyoti, group vice president of worldwide artificial intelligence and automation market research and advisory services at IDC.

"With ethical and responsible implementation, GenAI is poised to reshape industries, changing the way we work, play, and interact with the world."

The research firm expects GenAI investments to follow a natural progression over the coming years as organisations transition from early experimentation to aggressive build out with targeted use cases to widespread adoption across business activities with an extension of GenAI use to the edge.

"The rate of GenAI spending will be somewhat constrained through 2025 due to turbulence in workload shifts and resource allocation, not just in silicon but also in networking, facilities, model confidence, and AI skills," adds Rick Villars, group VP of worldwide research at IDC.

"Other factors that might constrain the expected rate of investment include pricing, concerns about privacy and security, and the possibility of an existential crisis that triggers major consumer antipathy or government interventions."

IDC predicts that by the end of the forecast, GenAI spending will account for 28.1 per cent of overall AI investment, up significantly from nine per cent in 2023.

It adds GenAI spending will remain strong well beyond the build out phase as these solutions become a foundational element in enterprises' digital business control platforms.