IDC: Worldwide AI Spending Grew Over 20% in 2021, will Reach $450B in 2022

A new report from IDC predicts the global market value of artificial intelligence solutions will reach close to $450 billion in 2022 and will continue to grow over the next five years.

According to IDC’s Worldwide Semiannual Artificial Intelligence Tracker, worldwide revenues for AI software, hardware, and services totaled $383.3 billion in 2021 for an increase of 20.7% over 2020.

The largest sector of the overall AI market was AI software in four categories: AI applications delivery and deployment, AI applications, AI system infrastructure software, and AI platforms. These categories combined to reach over $340 billion in market value in 2021 with AI applications accounting for nearly half. AI platforms demonstrated a YoY growth rate of 36.6%.

IDC says the AI applications market remains highly competitive, as almost 300 companies are competing in the space. The biggest players in the AI applications category were customer relationship management applications (CRM) and AI enterprise resource management applications (ERM) that each comprised around 16% of the category total.

AI-centric applications, defined by IDC as applications in which AI technologies are central and critical to their function, captured 12.9% of the 2021 market for a YoY increase of 29.3%. The remainder of the market was held by AI non-centric applications, or those where AI technologies are integral to certain workflows of the application, but if those technologies were removed, the application would still be functional.

Cloud-deployed AI software is showing steady growth, and IDC predicts cloud deployment of newly purchased AI software will surpass on-premises deployments in 2022. Figures show that 47.3% of AI software purchases were deployed to the public cloud for an increase of four percentage points over 2020 and 8.4 percentage points over 2019.

Another sector showing growth is the AI services market, which showed an increase in total value of 22.4% YoY. IDC reports that the AI IT services category grew 21.9% YoY to $18.8 billion due to client demand for production-grade AI solutions. Additionally, the increased demand for AI governance, business process, and talent strategy solutions grew the AI business services category at a rate of 24.2% YoY.

The smallest yet fastest growing segment of the AI market is AI hardware. At $18.8 billion with 38.9% YoY growth, IDC says AI hardware growth was driven by efforts to build dedicated AI systems capable of meeting the increased compute and storage demands of AI models and datasets. AI servers and AI storage grew by 39.1% and 32.9% respectively, and server purchases were at $15.6 billion.

“Across all industries and functions, end-user organizations are discovering the benefits of AI technologies, as increasingly powerful AI solutions are enabling better decision-making and higher productivity,” said Rasmus Andsbjerg, associate vice president, Data & Analytics at IDC. “The reality is, AI offers solutions to everything we are facing at the moment. AI can be a source for fast-tracking digital transformation journeys, enable cost savings in times of staggering inflation rates and support automation efforts in times of labor shortages.”

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