Companies to Spend Almost $342 Billion on AI Solutions in 2021

Worldwide revenues for the AI market, including software, hardware, and services, is estimated to grow 15.2% year over year in 2021 to $341.8 billion, according to IDC. The market is forecast to accelerate further in 2022 with 18.8% growth and remain on track to break the $500 billion mark by 2024.

Among the three technology categories, AI Software occupied 88% of the overall AI market. However, in terms of growth, AI Hardware is estimated to grow the fastest in the next several years. From 2023 onwards, AI Services is forecast to become the fastest growing category. Within the AI Software category, AI Applications has the lion's share at nearly 50% of revenues. In terms of growth, AI Platforms is the strongest with a five-year compound annual growth rate (CAGR) of 33.2%. The slowest will be AI System Infrastructure Software with a five-year CAGR of 14.4% while accounting for roughly 35% of all AI Software revenues. Within the AI Applications market, AI ERM is expected to grow slightly stronger than AI CRM over the next five years. Meanwhile, AI Lifecycle Software is forecast to grow the fastest among the markets within AI Platforms.

The AI Services market was estimated at $19.4 billion in 2020, representing the fastest growth relative to hardware and software. For 2021, it is forecast to grow at 19.3%. Over the next five years, it is expected to enjoy the best CAGR at 21%. This technology category breaks down into two segments: IT Services and Business Services. IT Services is the larger of the two, accounting for nearly 80% of all AI Services revenues. From a growth perspective, the two markets are similar with five-year CAGRs of 21%. Overall, AI Services is expected to be a $50 billion market by 2025.

Almost 190 companies were included in the AI Services market in this release of the AI Tracker. Under IT Services for AI, the Top 3 companies in 2020 were IBM, Accenture, and Tata Consultancy Services. Each of the three companies achieved over $1 billion in revenues and combined for a total of 26% market share. Beyond them, another eight companies generated more than $500 million each. The Top 3 companies in Business Services for AI in 2020 were Ernst & Young, Accenture, and Deloitte, accounting for a combined share of 46%. Outside of these top 3, there were another nine companies that broke the $100 million mark during 2020. Overall, the competitive landscape in both services markets for AI remains highly fragmented where many players from across the services value chain continue to invest in technology assets, innovation resources, and expertise in applying AI to solve industry- and domain-specific problems for clients.

AI Hardware is the smallest category with 5% share of the overall AI market. Nonetheless, it is forecast to grow the fastest in 2021 at 29.6% year over year. It is also expected to hold the best growth spot in 2022. Over the next five years, its CAGR is estimated at 19.4%. This technology category breaks down into two markets: Server and Storage. Server has the larger share at approximately 82% while Storage is forecast to have better growth with a five-year CAGR of 22.1%. In AI Server market, there were a total of six companies that generated over $500 million each in 2020; they are (in alphabetical order) Dell, HPE, Huawei, IBM, Inspur, and Lenovo. Together, they held 62% of overall market share. Meanwhile, in the AI Storage market, there were also six companies that achieved over $100 million each in 2020; they are (in alphabetical order) Dell, HPE, Hitachi, Huawei, IBM, and NetApp. These six companies had a combined market share of 68%.