Spending on Cognitive and AI Systems Will Reach $57.6 Billion in 2021

Worldwide spending on cognitive and artificial intelligence (AI) systems is forecast to reach $57.6 billion in 2021, according to IDC.

With many industries aggressively investing in cognitive and AI solutions, spending is expected to achieve a compound annual growth rate (CAGR) of 50.1% over the 2016-2021 forecast period. Worldwide spending on cognitive and AI systems will total $12.0 billion in 2017, an increase of 59.1% over 2016.

The retail and banking industries are forecast to spend the most on cognitive and AI systems in 2017 with investments of $1.74 billion and $1.72 billion, respectively. The discrete manufacturing, healthcare, and process manufacturing industries are also forecast to spend more than $1 billion each this year.

These five industries will continue to be the industries with the largest spending amounts throughout the five-year forecast and, by 2021, their combined investments will represent nearly 55% of all worldwide spending. In addition to spending the most on cognitive and AI systems, retail will also deliver the fastest spending growth with a 2016-2021 CAGR of 58.8%. Six other industries will see CAGRs greater than 50% over the forecast period.

Overall, the cognitive and AI use cases that will see the largest amount of spending in 2017 will be automated customer service agents ($1.5 billion) and diagnostic and treatment systems ($1.1 billion). These will remain the largest use cases in terms of spending throughout the forecast.

Meanwhile, the fifth largest use case in 2017, intelligent processing automation, will see enough investment growth over the forecast period to become the third largest use case in 2021. Similarly, the fourth largest use case in 2017, automated threat intelligence and prevention systems, will vault into the third position in 2021.

The use cases that will see the fastest spending growth over the 2016-2021 forecast are expert shopping advisors & product recommendations (96.6% CAGR), public safety and emergency response (96.2% CAGR), and intelligent processing automation (69.9% CAGR).

Roughly half of all spending on cognitive and AI technology will go to software, including cognitive applications and cognitive platforms, over the course of the forecast. Although software spending growth is expected to slow somewhat after 2019, services spending will experience steady growth throughout the forecast, achieving a five-year CAGR of 53.7%. Hardware will be the smallest and slowest growing area of spending, despite a robust CAGR of 40.4%.

On a geographic basis, the United States will deliver nearly 80% of global spending on cognitive and AI systems in 2017 and nearly 75% in 2021. Europe, the Middle East and Africa (EMEA) is currently the second largest region, but strong spending growth from Asia/Pacific (including a 73.6% CAGR in Japan) will move it ahead of EMEA by 2021.