AI spend nears $342 billion in 2021

Worldwide revenues for the artificial intelligence (AI) market, including software, hardware, and services, is estimated to grow 15% year-on year in 2021 to $341.8 billion, according to the latest release of the IDC Worldwide Semiannual Artificial Intelligence Tracker. 

The market is forecast to accelerate further in 2022 with 19% growth and remain on track to break the $500 billion mark by 2024. Among the three technology categories, AI Software occupied 88% of the overall AI market. 

In terms of growth, AI Hardware is estimated to grow the fastest in the next several years. From 2023 onwards, AI Services is forecast to become the fastest growing category.

Within the AI Software category, AI Applications has the lion’s share at nearly 50% of revenues. In terms of growth, AI Platforms is the strongest with a five-year CAGR of 32%.

The slowest will be AI System Infrastructure Software with a five-year CAGR of 14% while accounting for roughly 35% of all AI Software revenues. Within the AI Applications market, AI ERM is expected to grow slightly stronger than AI CRM over the next five years. Meanwhile, AI Lifecycle Software is forecast to grow the fastest among the markets within AI Platforms.

“We have now entered the domain of AI-augmented work and decision across all the functional areas of a business,” said Ritu Jyoti, group VP for AI and automation research at IDC. “Responsible creation and use of AI solutions that can sense, predict, respond, and adapt at speed is an important business imperative.”

Jennifer Hamel, IDC research manager of analytics and intelligent automation services, said AI has emerged as an essential component of the future enterprise, fueling demand for services partners to help organizations clear the many hurdles standing between pilot projects and enterprise AI.

“Client demand for expertise in developing production-grade AI solutions and establishing the right organisation, platform, governance, business process, and talent strategies to ensure sustainable AI adoption at scale drives expansion across both IT services and business services segments,” said Hamel.

Almost 190 companies were included in the AI Services market in this release of the AI Tracker. 

Overall, the competitive landscape in both IT and business services markets for AI remains highly fragmented where many players from across the services value chain continue to invest in technology assets, innovation resources, and expertise in applying AI to solve industry- and domain-specific problems for clients.

AI Hardware (server and storage) is the smallest category with 5% share of the overall AI market. Nonetheless, it is forecast to grow the fastest in 2021 at 30% year-on-year. It is also expected to hold the best growth spot in 2022. Over the next five years, its CAGR is estimated at 19%.