European AI and genAI market set to nearly triple by 2027 - IDC
Europe represents around one-fifth of the global AI market according to the study
The European AI and genAI market will reach almost $47.6bn in 2024 and record a compound annual growth rate (CAGR) of 33.7 per cent over the 2022-2027 forecast period, IDC's Worldwide AI and Generative AI Spending Guide reports.
The study said Europe represents around one-fifth of the global AI market and while the share of GenAI reached only 9.6 per cent of the total European AI market in 2023, it is increasing rapidly.
IDC expects genAI spend to grow more than three times as fast as spending on the rest of the AI market, and as a result, genAI will represent more than a quarter of the total European AI market in 2027.
Software will be the largest technology segment in 2024, the study found, with a market value higher than hardware and services combined.
This area is also expected to present the fastest growth in the 2022-2027 period, driven by demand for AI applications and platforms.
The share of hardware technologies will decrease during the period in favour of software technologies, with the exception of the software and information services industry, in which the hardware component remains the largest, due to specific AI infrastructure provisioning use cases that characterise this industry.
AI adoption is already widespread, and companies are demonstrating their willingness to expand that adoption to GenAI.
"Artificial Intelligence, as well as generative AI applications, should become fully integrated into the business, accompanied by responsible use," says Carla La Croce, research manager for customer insights and analysis at IDC.
"Realising the full potential of AI and generative AI requires time. Although it is clear what benefits AI and GenAI solutions potential bring to companies' internal organisation and processes, effectively realising these benefits requires long-term planning.
"This requires companies to have a flexible and adaptable business plan to integrate AI and GenAI in a broader forward-looking and responsible strategy."
According to the report, the banking, retail, and software and information services industries are the top three sectors in terms of AI spending, representing nearly a third of the European AI market.
In the financial sector, notable uses of AI solutions include augmented fraud analysis and investigation, threat intelligence and prevention systems, as well as program advisors and recommendation systems for customer support.
Financial institutions are increasingly integrating genAI into their banking services, such as for fraud detection or to generate accurate predictions and scenarios.
Retail is using AI technologies to enhance customer experience and satisfaction, with applications like augmented customer service agents, expert shopping advisors, and product recommendations.
The study notes that evolving customer expectations, fierce competition, and the quest for an enhanced online customer experience are driving retailers to experiment with emerging technologies like genAI, which is gaining traction for marketing, sales, and customer engagement purposes.
Finally, the software and information services industry, which includes software vendors and information and data services companies, is characterised by spending on infrastructure to provide computing and storage resources for AI systems development or services to end customers.
While hardware currently represents the largest technology component in this industry's AI spending, the market share for software is expected to increase in the long run, as software providers enable end users to leverage platform-as-a-service (PaaS) and software-as-a-service (SaaS) solutions.