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Artificial Intelligence Spending Grew 20.7% Worldwide in 2021, According to IDC

AI Software Captures the Largest Share of AI Spending with AI Platforms Delivering 36.6% Growth

Worldwide revenues for the artificial intelligence (AI) market, including software, hardware, and services for both AI centric and AI non-centric applications*, totaled $383.3 billion in 2021, an increase of 20.7% over the prior year, according to the most recent International Data Corporation (IDC) Worldwide Semiannual Artificial Intelligence Tracker. IDC expects the AI market value will reach nearly $450 billion in 2022 and maintain a year-over-year growth rate in the high teens throughout the five-year forecast.

"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."

AI Software again accounted for the largest share the overall AI market in 2021. Combined, the four AI Software categories – AI Applications Delivery & Deployment, AI Applications, AI System Infrastructure Software, and Artificial Intelligence Platforms – delivered more than $340 billion in market value in 2021 with AI Applications representing nearly half the total. Artificial Intelligence Platforms delivered the strongest year-over-year growth at 36.6%, albeit from a smaller baseline.

A graphic illustrating worldwide AI software revenue by category (AI Applications, AI System Infrastructure Software, AI Application Development & Deployment, and Artificial Intelligence Platforms) for 2020 and 2021 is available by viewing this press release on IDC.com.

Within the AI Applications category, AI Customer Relationship Management (CRM) Applications and AI Enterprise Resource Management (ERM) Applications each delivered about 16% of the category total. The remainder was delivered by the myriad of other AI Applications available in the market. With nearly 300 companies vying for opportunities to gain share, the AI Applications market remains highly competitive.

IDC's AI Tracker also shows that AI centric applications, in which AI technologies are central and critical to the function of the application, continued to slowly grow its share of the AI Software market. In 2021, AI-centric applications captured 12.9% of the market, up 29.3% year over year. The remainder of the market was held by AI non-centric applications, where AI technologies are integral to certain workflows of the application, but if those technologies were removed, the application would still be able to function.

Similarly, the deployment of AI Software to the cloud continues to show steady growth. In 2021, 47.3% of AI Software purchases were deployed to the public cloud, an increase of four percentage points over 2020 and 8.4 percentage points over 2019. IDC expects cloud deployment of newly purchased AI Software to surpass on premises deployments in 2022.

The AI Services market saw its total value increase 22.4% year over year to $24 billion in 2021. Client demand for expertise in developing production-grade AI solutions helped the AI IT Services category grow 21.9% year over year to $18.8 billion. The AI Business Services category grew 24.2% year over year as organizations sought assistance on AI governance, business process, and talent strategies.

AI Hardware was both the smallest ($18.8 billion) and fastest growing (38.9% year over year growth) segment of the AI market. The hardware growth was driven by efforts to build dedicated AI systems capable of meeting the increased compute and storage demands of AI models and data sets. While both AI Servers and AI Storage delivered strong growth in 2021 – 39.1% and 32.9% respectively – server purchases were notably larger at $15.6 billion.

* Taxonomy Note: The IDC Worldwide Semiannual Artificial Intelligence Tracker uses a broad definition of AI Applications that includes both AI-centric applications and AI non-centric applications. AI–centric applications are AI applications or modules where AI technologies are central and critical to the function of the application, and if the AI technologies are eliminated, the application will cease to exist. AI non-centric applications include those applications where the AI component is non-centric, or not fundamental, to the application. In other words, the application will function without the inclusion of the AI component. This enables the inclusion of vendors that have incorporated AI capabilities into their software, but the applications are not exclusively used for AI functions only. In comparison, the IDC Worldwide Artificial Intelligence Spending Guide uses only the AI-centric definition of what constitutes an AI Application. This distinction enables the Spending Guide to focus on those software applications that are strongly AI Centric.

The IDC Worldwide Semiannual Artificial Intelligence Tracker provides spending data and vendor share for the global AI solutions market on a semi-annual basis. The key technology groups – hardware, software, and services – are built on IDC's comprehensive methodology involving vendor product, market, and workload modeling. AI revenues for over 750 companies are included in the Tracker, ensuring that the competitive landscape is well represented across all the three technology groups. Data is available for 27 countries and five rest-of regions.

About IDC Trackers

IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC's Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly Excel deliverables and on-line query tools.

For more information about IDC's Worldwide Semiannual Artificial Intelligence Tracker, please contact Kathy Nagamine at 650-350-6423 or knagamine@idc.com.

Click here to learn about IDC's full suite of data products and how you can leverage them to grow your business.

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,300 analysts worldwide, IDC offers global, regional, and local expertise on technology, IT benchmarking and sourcing, and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the world's leading tech media, data, and marketing services company. To learn more about IDC, please visit https://www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC Blog for industry news and insights.

Worldwide revenues for the artificial intelligence (AI) market, including software, hardware, and services, grew 20.7% year over year in 2021, according to IDC.

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