NEEDHAM, Mass. Spending on artificial intelligence in the United States will grow to $120 billion by 2025, representing a compound annual growth rate (CAGR) of 26.0% over the 2021-2025 forecast period.

Moreover, all 19 U.S. industries profiled in the latest Worldwide Artificial Intelligence Spending Guide from International Data Corporation (IDC) are forecast to deliver AI spending growth of 20% or more. The U.S. also accounts for more than half of all AI spending worldwide.

Retail will remain the largest U.S. industry for AI spending throughout the forecast while Banking will be the second-largest industry.

Together, these two industries will represent nearly 28% of all AI spending in the United States in 2025 and will account for nearly $20 billion of the amount added to the U.S. total over the forecast.

The U.S. industries that will see the fastest growth in AI spending will be Professional Services, Media, and Securities and Investment Services, all of which will have CAGRs greater than 30%.

Within Retail, the AI use cases that will receive the most investment will be Augmented Customer Service Agents, and Expert Shopping Advisors & Product Recommendations. These two use cases encourage and assist increased spending by retail customers and account for nearly 40 percent of AI spending in the industry.

The shift to online shopping contributes considerably to the adoption of AI within retail. AI spending in the Banking industry will be spread across several different functional areas, including customer service (Program Advisors and Recommendation Systems), operations (Fraud Analysis and Investigation), and security (Augmented Threat Intelligence and Prevention Systems).

Among the 30 AI use cases included in the Spending Guide, two will remain the largest in terms of total spending throughout the forecast – Augmented Customer Service Agents and Sales Process Recommendation and Augmentation.

Together, these two use cases will account for more than 20% of all AI spending in the U.S. in 2025. In terms of growth, two AI use cases (Public Safety and Emergency Response and Augmented Claims Processing) will have five-year CAGRs greater than 30% while a third use case (IT Optimization) will ride a CAGR of 29.7% to become the third largest AI use case in 2025.

“The greatest potential benefit for the use of AI remains its use in developing new business, and building new business models,” said Mike Glennon, senior research manager with IDC’s Customer Insights & Analysis team.

“However, existing businesses are hesitant to embrace this potential, leaving the greatest opportunities to new market entrants that have no fear of change and can adapt easily to new ways of conducting business. The future for business is AI and those companies that can seize this opportunity could easily become the new giants.”

The Worldwide Artificial Intelligence Spending Guide sizes spending for technologies that analyze, organize, access, and provide advisory services based on a range of unstructured information.

The Spending Guide quantifies the AI opportunity by providing data for 30 use cases across 19 industries in nine regions and 32 countries. Data is also available for the related hardware, software, and services categories.