The size of the global market for artificial intelligence is expected to increase to $997.77 billion in 2028, according to recent statistics. Consequently, by 2025, the artificial intelligence market forecasts that 97 million people will be employed in the global AI industry.
As a result, the growth in the demand for AI plays a significant role in the global AI market. For instance, the market is segmented on component analysis, technology, end-user industry, verticals, and geography. Furthermore, each segment is based on specific characteristics to discover insights. In addition, AI can be incorporated in two ways: through solutions such as chatbots and services, such as installation, integration, and maintenance.
Among all these segments, the verticals segment was the largest in revenue generation, accounting for more than 50% of total AI market revenue in 2016. It was followed by the software and services segment, accounting for around 30%. This can be attributed to growing use cases across multiple domains, such as retail and eCommerce, healthcare, automotive and transportation, manufacturing and logistics, IT and telecommunications, and media and entertainment.
There are increasing investments in developing applied artificial intelligence systems and the growing use of artificial intelligence technology in various applications. These include autonomous cars, speech and voice recognition technology, virtual personal assistants, and robotics. Artificial intelligence is coming, and it’s a much-anticipated future tech. But how big is the artificial intelligence market? What will its valuation be in the following years? How far has this technology come? And where will it lead? In this article, we’ll try to answer these questions for you.
The global artificial intelligence market size was $93.5 billion in 2021. And according to Grand View Research, Inc., it is projected to expand at a compound annual growth rate (CAGR) of 38.1% from 2022 to 2030. The market is driven by the increasing number of connected devices, growing demand for personalized services, and a need for real-time solutions. Additionally, advancements in cloud computing technology, along with developments in deep learning algorithms, have increased the adoption rate of AI.
Artificial intelligence growth can be attributed to its widespread application across diverse sectors, including healthcare, retail, and finance. However, some challenges must be addressed before it can reach mainstream adoption. These hurdles include high infrastructure costs associated with implementing AI systems and a lack of awareness about these technologies among businesses that could benefit from them.
The artificial intelligence market is segmented based on product type, application, and region. Based on product type, the market has been subdivided into service robots and software. The services portion accounted for around 66% share in 2016. Based on application, AI has segmented into healthcare and life sciences; manufacturing and logistics; energy and utilities; banking, financial services, and insurance (BFSI); process manufacturing industries; retail and eCommerce; and agriculture and forestry sectors (agribusinesses).
The healthcare sector holds significant potential for AI across various applications. This includes medical imaging analysis, molecular biology research, and drug discovery. Additionally, there are developments in drug optimization through predictive analytics tools provided by leading players, such as NVIDIA Corporation (NVDA), Intel Corporation (INTC), Alphabet Inc. (GOOGL), and Amazon Web Services Inc. (AMZN). This is primarily due to their high adoption rate among researchers worldwide coupled with increasing demand from patients willing to pay extra if provided better care due to side effects associated with traditional treatment methods.
AI market analysis can be segmented into hardware, software, and service components. The hardware segment is expected to grow at the highest CAGR during the forecast period. The need for AI services is projected to rise as smart solutions such as virtual assistants and personalized online experiences become more widely used. These services use AI capabilities to improve business operations, such as creating automated and accurate sales projections based on client interactions and sales data.
There are many different types of artificial intelligence, so it can be difficult to understand the market without an overview of the technology. The AI market is further segmented by technology. Natural language processing (NLP), machine learning, context-aware computing, computer vision, and virtual agents are some major technologies used in the AI market.
NLP enables a system to understand human language through various methods like speech recognition and natural language understanding. Machine learning refers to the process of developing an algorithm that can automatically learn from its experience without being explicitly programmed. Context-aware computing refers to systems that adapt their behavior according to their surroundings or environment, such as GPS location services on smartphones or self-driving cars.
Computer vision refers to techniques used to process images for perception tasks, such as facial recognition, which plays a role in self-driving cars that can detect pedestrians at night in low visibility conditions.
The AI market is segmented by end-user industry into retail, healthcare and life sciences, automotive and transportation, BFSI, consumer goods and retail, manufacturing, media and entertainment, agriculture and food, and energy and utilities.
The retail sector accounted for one of the largest shares of the AI market in 2020. This can be attributed to the rise in smartphone usage across the globe, as well as an increase in the use of smart devices. Smartphones have also increased the demand for mobile commerce platforms, such as the customized CoverGirl app. The app employs predictive analytics software and applies real-time data to deliver personalized experiences to customers based on their preferences.
The automotive industry also accounted for a sizable share of the global artificial intelligence market. This can be attributed to the increased adoption of self-driving vehicles globally. This has also led to more adoption of intelligent transportation systems, such as electronic toll collection, ramp meters, red light cameras, traffic signal coordination, transit signal priority, and traveler information systems.
The healthcare and life sciences segment is expected to grow at the highest rate in the next few years, owing to the increasing demand for personalized medicine solutions. As it is based on each patient’s unique genetic composition, personalized medicine is beginning to transcend standard medicine’s limits. For example, personalized treatment for diabetes (PMFD) uses knowledge about a person’s genetic composition to modify tactics for preventing, diagnosing, treating, or monitoring diabetes.
As businesses and other organizations worldwide have been dealing with the consequences of the ongoing COVID-19 pandemic and plan for a post-pandemic future, one critical question arises: how much did COVID affect the AI market globally?
“AI is still in the early stages of a long secular growth trend,” says Erik Brynjolfsson, professor and senior fellow at Stanford Institute for Human-Centered AI (HAI) and director of the Stanford Digital Economy Lab. “But the pandemic is accelerating that trend, especially in areas like biotech, including drug design and discovery.” According to an annual study on AI and its impact and progress developed by Stanford HAI, hiring, investment, and adoption of AI grew in 2020, reflecting long-term business trends that would likely outlive the pandemic’s effects.
During the pandemic, investment in AI-focused private enterprises remained substantial, particularly in fields tied to COVID. Additionally, when it comes to company investments in AI capabilities, Brynjolfsson says, “while some firms decreased their investments, slightly more firms increased their investments.” He also highlights that the biggest increases in investment were made in healthcare and pharma.
However, sectors beyond healthcare also showcased increased investment in AI for the long term, like education, retail, and the automotive industry. As a result, the AI industry saw substantial hiring growth during COVID-19. Manufacturing and retail are expected to grow in hiring AI-related jobs, thus catching up with healthcare, finance, and other service industries that have been strong early adopters of AI.
According to Tortoise Intelligence, global investment in AI firms has surged by 115% since 2020, the biggest year-over-year increase in AI investment in at least two decades.
Investments in AI are increasing across all parts of the world, and there are many examples where countries have been making significant investments in technology. For example, China has invested heavily in developing AI capabilities through its national strategy and has made it one of its top priorities for economic development. The European Union (EU) has also created an initiative called Horizon 2020 that aims to invest €1 billion per year into research projects related to future technologies, such as artificial intelligence, robotics, nanotechnology, and advanced manufacturing processes.
In 2021, North America dominated the AI market and accounted for a revenue share of more than 42%. This significant proportion is related to government measures that stimulate the deployment of AI across a variety of businesses. For instance, President Trump unveiled the American AI Initiative in February 2019 as the nation’s strategy for advancing leadership in artificial intelligence. As part of this endeavor, federal authorities bolstered public confidence in AI-based systems by setting rules for their development and real-world use across various industries.
As such, North America is expected to hold the largest share of the AI market during the coming years. North America is home to several technology companies and has a strong network of research and development centers in this domain. The U.S., Canada, and Mexico are major markets for AI-based services and technologies. Furthermore, North America accounts for many global venture capital investments in AI startups, which indicates its growing adoption rate by businesses worldwide.
In Asia and the Pacific, the market is expected to grow at a substantial CAGR over the next few years. This expansion is attributable to the increased investments in artificial intelligence. For example, Baidu, Inc., a Chinese Internet behemoth, stated in April 2018 that it had entered into definitive agreements with investors about the sale of its financial services group, which provides wealth management, consumer lending, and other commercial services. In addition, the increasing number of AI startups in the region is accelerating the implementation of AI to enhance operational efficiency and enable process automation.
Additionally, the region is expected to continue growing in the healthcare, manufacturing, finance, and retail sectors. This is due to increased revenue generated from the sale of AI products and services.
Against this backdrop, let us have a look at the latest trends in the artificial intelligence market.
Chatbots are becoming more commonplace as businesses use them to interact with customers online. These virtual assistants typically handle basic questions and can be programmed to remember details about previous conversations. The market for chatbots is expected to reach $1 billion by 2022, according to Statista.
In 2021, the deep learning category led the market and accounted for approximately 37% of global revenue. This expansion is due to its complex data-driven applications, such as text/content or audio recognition. Additionally, deep learning provides profitable investment opportunities by overcoming the obstacles posed by analyzing large data volumes.
All businesses rely on data to function. Data-driven choices are increasingly determining whether a company stays competitive or falls further behind. Machine learning has the potential to uncover the value of corporate and consumer data and enable companies to make decisions that keep them ahead of the competition.
The increasing deployment of cloud-based computing platforms and on-premises hardware for the safe and secure restoration of massive datasets has opened the way for analytics platform development. Increased artificial intelligence market research and development spending by industry leaders will also accelerate these technologies’ deployment. During the forecast period, it is anticipated that the NLP segment will gain momentum. NLP is being utilized in a growing number of industries to better comprehend client preferences, changing trends, purchasing behavior, and decision-making processes. In addition, apps are changing the stock market thanks to a new AI model for investment.
The global artificial Intelligence market is one of the fastest growing segments in the technology industry. Its growth can be attributed to several factors, including increasing investments in AI system development and demand from healthcare, retail, and manufacturing industries.
The growing investments in the development of new technologies, such as machine learning and deep learning, are propelling the demand for artificial intelligence systems across various sectors. As a result, artificial intelligence systems are expected to witness significant growth due to their extensive applicability across various industries, such as manufacturing, banking and financial services, and the telecommunication sector.