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The global revenues for the artificial intelligence (AI) market, including software, hardware, and services, is forecast to grow 19.6 per cent (on-year) in 2022 to $432.8 billion, according to a new report.

The market is expected to break the $500 billion mark in 2023, reports International Data Corporation (IDC).

AI solutions are currently focused on business process problems and range from human augmentation to process improvement to planning and forecasting, empowering superior decisioning and outcomes.

"Advancements in language, voice and vision technologies, and multi-modal AI solutions are revolutionizing human efficiencies," said Ritu Jyoti, group VP, Worldwide Artificial Intelligence (AI) and Automation Research at IDC.

AI software will see its share of spending decline slightly in 2022 as spending for AI hardware and services grows more quickly. This trend will continue into 2023.

Overall, AI services is forecast to deliver the fastest spending growth over the next five years with a compound annual growth rate (CAGR) of 22 per cent while the CAGR for AI Hardware will be 20.5 per cent.

"Overall, AI plus human ingenuity is the differentiator for enterprises to scale and thrive in the era of compressed digital transformation," said Jyoti.

In the AI software category, AI applications accounted for 47 per cent of spending in the first half of 2021, followed by AI System Infrastructure Software with around 35 per cent share.

"AI remains a key driver of IT investment, which in turn boosts spending on related services to ensure sustainable adoption at scale," said Jennifer Hamel, research manager, Analytics and Intelligent Automation Services.

The AI hardware category grew the most in terms of market share in the first half of 2021 with a jump of 0.5 per cent share.

It is forecast to reach 5 per cent market share in 2022 with year-over-year growth of 24.9 per cent.

"Of all the spending in the various AI market segments, AI Hardware is by far the smallest," said Peter Rutten, research vice president, Performance Intensive Computing at IDC.