A new forecast from IDC’s Worldwide Artificial Intelligence Spending Guide shows that global spending on artificial intelligence (AI) – including software, hardware, and services for AI-centric systems – will reach $154-billion in 2023, an increase of 26,9% over the amount spent in 2022.

The ongoing incorporation of AI into a wide range of products will result in a compound annual growth rate (CAGR) of 27% over the 2022 to 2026 forecast with spending on AI-centric systems expected to surpass $300-billion in 2026.

“Companies that are slow to adopt AI will be left behind – both large and small,” says Mike Glennon, senior market research analyst with IDC’s Customer Insights & Analysis team. “AI is best used in these companies to augment human abilities, automate repetitive tasks, provide personalised recommendations, and make data-driven decisions with speed and accuracy.

“Suppliers of AI technologies need to know which are the largest and fastest-growing opportunities, but without data they become just another opinion. IDC’s AI Spending Guide provides the foundation for marketing strategy through its comprehensive coverage of AI opportunities and gives a robust basis for a market focus that ties with companies’ capabilities.”

One indicator of how broad spending on AI-centric systems will be over the next five years is that only one of the 36 AI use cases identified by IDC will have a CAGR of less than 24% over the forecast period.

Three of the leading AI use cases in terms of spending focus on sales and customer service functions: Augmented Customer Service Agents, Sales Process Recommendation and Augmentation, and Programme Advisors and Recommendation Systems. These three use cases will see investment from nearly every industry and, combined, will account for more than a quarter of all AI spending in 2023.

The other use cases that will see the largest spending this year support a more diverse set of tasks: IT Optimisation, Augmented Threat Intelligence and Prevention Systems, and Fraud Analysis and Investigation.

The two industries that will deliver the largest AI investments in 2023 and throughout the forecast are banking and retail. The next largest industry for AI spending will be professional services, followed by discrete and process manufacturing.

Together, these five industries will account for more than half of all spending on AI-centric systems this year. The fastest growth in AI spending will come from the media industry with a five-year CAGR of 30,2%. However, much like use case spending, only two of the industries in the spending guide will have CAGRs of less than 25%.

“AI technology will continue to bring empowering effects to users and industry sectors,” says Xueqing Zhang, senior market analyst with IDC’s China Enterprise Research Department. “With the support of pre-trained large models, multi-modal, and other technologies, AI capabilities will be applied to the whole process of production on a large scale, promoting the technology from the concept to large-scale application of landing.

“In the future, both government-level urban issues and life issues that are closely related to everyone will enjoy the dividends brought by AI technology and eventually usher in AI for all,” Zhang adds.

From a geographic perspective, the US will be the largest market for AI-centric systems, accounting for more than 50% of all AI spending worldwide throughout the forecast. Western Europe will account for more than 20% of worldwide IT spending accompanied by a five-year CAGR of 30%, one of the fastest growth rates over the forecast period. The People’s Republic of China will be the third largest AI market with the slowest growth rate (20,6% CAGR).