Global AI Investment To Reach $632 Billion By 2028, Driven By Rapid GenAI Growth: IDC Report

A new projection that was made public on Monday predicts that by 2028, global investment in artificial intelligence (AI) will amount to $632 billion. Infrastructure, AI-enabled apps, and other business and IT services are all included in this expenditure.

A recent estimate from the International Data Corporation (IDC) projects that throughout the 2024–2028 prediction period, the fast incorporation of artificial intelligence (AI), and generative AI (GenAI) in particular, into a wide range of products, would result in a compound annual growth rate (CAGR) of 29 per cent.

By 2028, the US will have invested $336 billion in AI, making it the most expensive region in the world. Western Europe, excluding Japan and China, will be the second-largest region in terms of AI spending, after China and Asia/Pacific.

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According to Ritu Jyoti, group vice president and general manager, of AI and Data Research at IDC, there will be fewer obstacles to the widespread use of AI due to the abundance of reliable AI tools and technologies and the better harmonisation of human and machine interaction.

With a five-year CAGR of 59.2 per cent, GenAI will be able to surpass the entire AI market because of the quick rise in investments in the category. IDC projects that by the conclusion of the forecast, spending on GenAI will amount to $202 billion, or 32 per cent of all spending on AI.

Software will account for more than half of the total AI market for the majority of the projection period, making it the largest category of technological spending, according to the report. The next biggest area of technological spending will be on AI hardware, which includes servers, storage, and Infrastructure as a Service (IaaS).

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With a CAGR of 24.3 per cent, IT and business services will expand at a somewhat quicker rate than hardware. By contrast, the report projected a five-year compound annual growth rate (CAGR) of 33.9 per cent for AI software.

The financial sector is anticipated to spend the most on AI solutions throughout the 2024–2028 prediction period. According to the report, business and personal services (32.8 per cent CAGR) and transport and leisure (31.7 per cent CAGR) would experience the biggest growth in AI investment.