Global AI spending to soar to $632 billion by 2028

Global spending on Artificial Intelligence (AI), encompassing AI-enabled applications, infrastructure, and related IT and business services, is projected to reach $632 billion by 2028, according to a new report by the International Data Corporation (IDC). The widespread adoption of AI, particularly Generative AI (GenAI), across various products is expected to drive a compound annual growth rate (CAGR) of 29 per cent during the 2024-2028 forecast period.

The US is anticipated to lead in AI investment, with spending reaching $336 billion by 2028, making it the largest geographic region for AI spending. Western Europe is projected to follow as the second-largest region, with China and Asia-Pacific (excluding Japan and China) also emerging as significant contributors to AI investment.

The rapid increase in GenAI investments is expected to outpace the broader AI market, with a five-year CAGR of 59.2 per cent. By the end of the forecast period, GenAI spending is projected to reach $202 billion, accounting for 32 per cent of overall AI spending.

Software is anticipated to be the largest category of technology spending within the AI market, representing more than half of the total market throughout most of the forecast period. AI hardware, including servers, storage, and Infrastructure as a Service (IaaS), will be the next largest spending category. IT and business services are expected to grow slightly faster than hardware, with a CAGR of 24.3 per cent, while AI software will experience a five-year CAGR of 33.9 per cent.

Among industries, financial services are expected to lead AI solution spending, while business and personal services (32.8 per cent CAGR) and transportation and leisure (31.7 per cent CAGR) are projected to see the fastest growth in AI spending.