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Spending on AI systems to hit nearly $36 billion this year

Worldwide spending on artificial intelligence (AI) systems is forecast to reach $35.8 billion in 2019, an increase of 44.0% over the amount spent in 2018. 

With industries investing aggressively in projects that utilize AI software capabilities, the International Data Corporation (IDC) Worldwide Semiannual Artificial Intelligence Systems Spending Guide expects spending on AI systems will more than double to $79.2 billion in 2022 with a compound annual growth rate (CAGR) of 38.0% over the 2018-2022 forecast period.

Global spending on AI systems will be led by the retail industry where companies will invest $5.9 billion this year on solutions such as automated customer service agents and expert shopping advisors & product recommendations, according to IDC. Banking will be the second largest industry with $5.6 billion going toward AI-enabled solutions including automated threat intelligence & prevention systems and fraud analysis & investigation systems. 

Discrete manufacturing, healthcare providers, and process manufacturing will complete the top 5 industries for AI systems spending this year. The industries that will experience the fastest growth in AI systems spending over the 2018-2022 forecast are federal/central government (44.3% CAGR), personal and consumer services (43.3% CAGR), and education (42.9% CAGR).

“Significant worldwide artificial intelligence systems spend can now be seen within every industry as AI initiatives continue to optimize operations, transform the customer experience, and create new products and services”, said Marianne Daquila, research manager, Customer Insights & Analysis at IDC. “This is evidenced by use cases, such as intelligent process automation, expert shopping advisors & product recommendations, and pharmaceutical research and discovery exceeding the average five-year compound annual growth of 38%. The continued advancement of AI-related technologies will drive double-digit year-over-year spend into the next decade.”

IDC says the AI use cases that will see the most investment this year are automated customer service agents ($4.5 billion worldwide), sales process recommendation and automation ($2.7 billion), and automated threat intelligence and prevention systems ($2.7 billion). Five other use cases will see spending levels greater than $2 billion in 2019: automated preventative maintenance, diagnosis and treatment systems, fraud analysis and investigation, intelligent process automation, and program advisors and recommendation systems.

Software will be the largest area of AI systems spending in 2019 with nearly $13.5 billion going toward AI applications and AI software platforms. AI applications will be the fastest growing category of AI spending with a five-year CAGR of 47.3%. Hardware spending, dominated by servers, will be $12.7 billion this year as companies continue to build out the infrastructure necessary to support AI systems. 

Companies will also invest in IT services to help with the development and implementation of their AI systems and business services such as consulting and horizontal business process outsourcing related to these systems. By the end of the forecast, AI-related services spending will nearly equal hardware spending.

“IDC is seeing that spending on both AI software platforms and AI applications are continuing to trend upwards and the types and varieties of use cases are also expanding,” said David Schubmehl, research director, Cognitive/Artificial Intelligence Systems at IDC. “While organizations see continuing challenges with staffing, data, and other issues deploying AI solutions, they are finding that they can help to significantly improve the bottom line of their enterprises by reducing costs, improving revenue, and providing better, faster access to information thereby improving decision making.”

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