Spending on artificial intelligence infrastructure is exploding. So is spending on AI for supply chains. But disappointing results on early GenAI tests is causing some CIOs to worry about the ROI.
That’s some of the latest intelligence from leading IT market watchers and researchers. And here’s your research roundup.
AI Infrastructure: $100B and Beyond
Behind every AI implementation is the need for high-end infrastructure. And spending on this type of equipment is expected to grow rapidly.
Market watcher IDC predicts that global spending on AI infrastructure will exceed $100 billion by 2028. Last year this spending totaled roughly $70 billion.
The AI infrastructure market has enjoyed double-digit growth for the last four and a half years, driven primarily by investments in servers, IDC says. In the first half of 2024, servers accounted for nearly 90% of all AI infrastructure spending.
Covered in IDC’s definition of AI infrastructure are servers and storage used for AI platforms, AI and AI-enabled applications, and AI applications development & deployment software.
AI Servers: $200B
That could be only the tip of the iceberg. Gartner researchers now predict worldwide spending on AI-optimized servers will top $200 billion this year. They also say that’s more than double what’s expected to be spent on more traditional servers.
About 70% of that $200 billion will be spent not by end users, but instead by big IT services companies and hyperscalers, Gartner expects. By 2028, the hyperscalers—large cloud providers including AWS, Google Cloud and Microsoft Azure—will operate AI-optimized servers collectively worth about $1 trillion.
Worth noting: This AI spending is part of an even bigger trend. Gartner predicts overall IT spending will rise this year by nearly 10%, reaching a global total of $5.6 trillion.
AI for Supply Chain: Huge
The use of AI in supply chain management is growing at a super-fast compound annual growth rate (CAGR) of 30%. This spending will jump from $3.5 billion in 2023 to $22.7 billion by 2030, according to a new forecast from ResearchAndMarkets.
Supply chain health became a major concern during the pandemic. Now companies realize they need supply chains that are resilient, adaptable and efficient. And AI can help.
The fastest-growing supply chain sector for AI is expected to be forecasting. There, AI can be used to predict future demand for various products. These forecasts can then be used by manufacturers and their partners to optimize inventories and production plans.
GenAI: Where’s the Value?
This year, Generative AI will fail to create its expected value, predicts ABI Research.
Many GenAI proof-of-concept trials have been disappointing, with failure rates as high as 80% to 90%, ABI says. This is seriously cooling some red-hot expectations.
As a result, some enterprise CIOs will turn away from GenAI. Instead, ABI expects, they’ll adopt more traditional AI approaches that solve business problems and deliver a clearer ROI.
ABI’s jaundiced view of GenAI gets some support from Gartner. In its 2025 IT market forecast, Gartner says GenAI is sliding toward the “trough of disillusionment.”
That phrase comes from Gartner’s Hype Cycle. It states that most innovations progress through a pattern of over-enthusiasm and disillusionment, followed by eventual productivity.
While businesses may still be searching for GenAI’s ROI, a growing number of teens are certainly finding it. About one in four U.S. teens (26%) used ChatGPT for schoolwork last year, according to a new Pew Research Center survey. That’s double the percentage of teens who did so in 2023.
AI’s New Mandate: Trust
A much more positive view comes from Accenture’s 25th annual technology vision report. The consulting firm's report says AI is accelerating across enterprises faster than any other prior technology.
What’s more, nearly 70% of executives polled by Accenture said they believe AI brings new urgency to re-invention and how tech systems and processes are designed, built and run.
An even bigger group, 80% of those polled, told Accenture that natural language processing (NLP) will increase collaboration between humans and robots.
One possible barrier to AI progress is the matter of trust. More than 75% of the executives polled by Accenture believe AI’s true benefits must be built on a foundation of trust.
Accenture CEO Julie Sweet agrees. “Unlocking the benefits of AI,” she says, “will only be possible if leaders seize the opportunity to inject and develop trust in its performance and outcomes.”