Businesses are increasingly investing in AI infrastructure and services, though there’s a shift towards using commercial off-the-shelf solutions with embedded GenAI features rather than solely developing custom solutions. 

A growing number of consumer products, including smartphones and PCs, are incorporating AI capabilities by default, contributing to the overall spending growth. IDC forecasts GenAI smartphones* to reach 54% of the market by 2028, while Gartner projects nearly 100% of premium models to feature GenAI by 2029, driving significant increases in both shipments and end-user spending.

* A GenAI smartphone is a a mobile device featuring a system-on-a-chip (SoC) with a powerful Neural Processing Unit (NPU) capable of running advanced Generative Artificial Intelligence (GenAI) models directly on the device. It enables features like content creation, personalized assistants, and real-time task processing without needing constant cloud connectivity. These phones are designed to execute complex AI tasks faster, more efficiently, and with enhanced privacy compared to standard smartphones that rely heavily on the internet for such functions. 

AI hardware, particularly GPUs and other AI accelerators, accounts for a substantial portion of the growth, with hyperscaler spending on these components nearly doubling, according to a story at  CIO Drive.