The market for generative AI (GAI) applications will grow from $6.2 billion in 2023 to $58.5 billion in 2028, with a CAGR of 56%, according to Omdia.
AI spending in Europe will reach $34.2 billion in 2023, representing 20.6% of the worldwide AI market, according to IDC. It will post a 29.6% compound annual growth rate (CAGR) between 2022 and 2027, slightly higher than the worldwide CAGR of 26.9% for the same period, with spending expected to exceed $96.1 billion in 2027.
AI solutions are becoming increasingly widespread, driven by operational efficiency and IT optimization needs, as well as to provide improved customer experiences. IDC identified augmented threat intelligence and prevention systems, together with augmented fraud analysis and investigation, as prevalent AI use cases, particularly in the finance sector and in more threat-exposed industries such as telecom or central and local government.
Improved customer experience and enhanced sales processes are delivered through use cases such as augmented customer service agents and sales process recommendation and augmentation, primarily in the retail space and, to a lesser extent, in banking. Banking, professional services, retail, manufacturing, and telecom are the biggest AI industries, accounting for more than 60% of total European AI market spending in 2023. While spending in other industries such as healthcare, media, personal and consumer services, and utilities is smaller, it is growing at a higher-than-average pace.
In an uncertain economic environment, where inflation is playing a key role in investment decisions, the AI market is still growing healthily, supported by demand for generative AI (GenAI) technologies. GenAI use cases are exploding. IDC’s Spending Guide shows that the fastest-growing GenAI use case is image creation, which is widely used in media and marketing activities, followed by text creation, particularly in the professional services industry.
"GenAI is gaining attention from vendors, consumers, and businesses, raising questions that range from how to embed the technology in products and how to benefit most from its usage to how to ensure responsible usage, given such widespread demand," said Carla La Croce, research manager for Customer Insights and Analysis, IDC. “Spending on GenAI use cases is still lower than for more well-established AI use cases, but it is growing rapidly. The creation of images, text, and videos are the most common use cases, with the greatest growth over the last year. Companies are racing to enhance existing applications with AI features, while more forward-looking and innovative vendors are embedding GenAI in their solutions to meet increasing demand.”