Spending on Cognitive and AI Systems Will Reach $77.6 Billion in 2022

Global spending on cognitive and artificial intelligence (AI) systems is forecast to continue its trajectory of robust growth as businesses invest in projects that utilize cognitive/AI software capabilities. According to IDC, spending on cognitive and AI systems will reach $77.6 billion in 2022, more than three times the $24.0 billion forecast for 2018. The compound annual growth rate (CAGR) for the 2017-2022 forecast period will be 37.3%.

Software will be the largest and fastest growing technology category throughout the forecast, representing around 40% of all spending with a five-year CAGR of 43.1%. Hardware will be the second largest area of spending until late in the forecast, when it will be overtaken by spending on related IT and business services. Both categories will experience strong growth over the forecast (30.6% and 36.4% CAGRs) despite growing slower than the overall market.

The use cases that will see the largest spending totals in 2018 are automated customer service agents ($2.9 billion), automated threat intelligence and prevention systems ($1.9 billion), sales process recommendation and automation ($1.7 billion). The use cases that will see the fastest investment growth over the forecast are pharmaceutical research and discovery (46.8% CAGR), expert shopping advisors & product recommendations (46.5% CAGR).

Banking and retail will be the two industries making the largest investments in cognitive/AI systems in 2018 with each industry expected to spend more than $4.0 billion this year. Banking will devote more than half of its spending to automated threat intelligence and prevention systems and fraud analysis and investigation while retail will focus on automated customer service agents and expert shopping advisors & product recommendations.

The industries that are expected to experience the fastest growth on cognitive/AI spending are personal and consumer services (44.5% CAGR) and federal/central government (43.5% CAGR). Retail will move into the top position by the end of the forecast with a five-year CAGR of 40.7%.

On a geographic basis, the United States will deliver more than 60% of all spending on cognitive/AI systems throughout the forecast, led by the retail and banking industries. Western Europe will be the second largest region, led by banking and retail. The strongest spending growth over the five-year forecast will be in Japan (62.4% CAGR) and Asia/Pacific (excluding Japan and China) (52.3% CAGR).