Spending on AI Solutions Will Double in the US by 2025, Says IDC

NEEDHAM, Mass., March 17, 2022 — Spending on artificial intelligence in the United States will grow to $120 billion by 2025, representing a compound annual growth rate (CAGR) of 26.0% over the 2021-2025 forecast period. Moreover, all 19 U.S. industries profiled in the latest Worldwide Artificial Intelligence Spending Guide from International Data Corporation (IDC) are forecast to deliver AI spending growth of 20% or more. The U.S. also accounts for more than half of all AI spending worldwide.

Retail will remain the largest U.S. industry for AI spending throughout the forecast while Banking will be the second largest industry. Together, these two industries will represent nearly 28% of all AI spending in the United States in 2025 and will account for nearly $20 billion of the amount added to the U.S. total over the forecast. The U.S. industries that will see the fastest growth in AI spending will be Professional Services, Media, and Securities and Investment Services, all of which will have CAGRs greater than 30%.

Within Retail, the AI use cases that will receive the most investment will be Augmented Customer Service Agents, and Expert Shopping Advisors & Product Recommendations. These two use cases encourage and assist increased spending by retail customers and account for nearly 40 percent of AI spending in the industry. The shift to online shopping contributes considerably to the adoption of AI within retail. AI spending in the Banking industry will be spread across several different functional areas, including customer service (Program Advisors and Recommendation Systems), operations (Fraud Analysis and Investigation), and security (Augmented Threat Intelligence and Prevention Systems).

Among the 30 AI use cases included in the Spending Guide, two will remain the largest in terms of total spending throughout the forecast – Augmented Customer Service Agents and Sales Process Recommendation and Augmentation. Together, these two use cases will account for more than 20% of all AI spending in the U.S. in 2025. In terms of growth, two AI use cases (Public Safety and Emergency Response and Augmented Claims Processing) will have five-year CAGRs greater than 30% while a third use case (IT Optimization) will ride a CAGR of 29.7% to become the third largest AI use case in 2025.

“The greatest potential benefit for the use of AI remains its use in developing new business, and building new business models,” said Mike Glennon, senior research manager with IDC’s Customer Insights & Analysis team. “However, existing businesses are hesitant to embrace this potential, leaving the greatest opportunities to new market entrants that have no fear of change and can adapt easily to new ways of conducting business. The future for business is AI and those companies that can seize this opportunity could easily become the new giants.”

The Worldwide Artificial Intelligence Spending Guide sizes spending for technologies that analyze, organize, access, and provide advisory services based on a range of unstructured information. The Spending Guide quantifies the AI opportunity by providing data for 30 use cases across 19 industries in nine regions and 32 countries. Data is also available for the related hardware, software, and services categories.

Taxonomy Note: The IDC Worldwide Artificial Intelligence Spending Guide uses a precise definition of what constitutes an AI Application in which the application must have an AI component that is crucial to the application – without this AI component the application will not function. This distinction enables the Spending Guide to focus on those software applications that are strongly AI Centric. In comparison, the IDC Worldwide Semiannual Artificial Intelligence Tracker uses a broad definition of AI Applications that includes applications where the AI component is non-centric, or not fundamental, to the application. This enables the inclusion of vendors that have incorporated AI capabilities into their software, but the applications are not exclusively used for AI functions only. In other words, the application will function without the inclusion of the AI component.

About IDC Spending Guides

IDC’s Spending Guides provide a granular view of key technology markets from a regional, vertical industry, use case, buyer, and technology perspective. The spending guides are delivered via pivot table format or custom query tool, allowing the user to easily extract meaningful information about each market by viewing data trends and relationships.

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About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,200 analysts worldwide, IDC offers global, regional, and local expertise on technology, IT benchmarking and sourcing, and industry opportunities and trends in over 110 countries. IDC’s analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the world’s leading tech media, data, and marketing services company. To learn more about IDC, please visit www.idc.com. Subscribe to the IDC Blog for industry news and insights.

Source: IDC