Artificial intelligence software market

Market Overview

The global market for Artificial Intelligence Software was estimated to be worth US$ 12600 million in 2023 and is forecast to a readjusted size of US$ 61.38 million by 2030 with a CAGR of 24.0% during the forecast period 2024-2032. Generative AI software spending will increase from 8% of AI software in 2023 to 35% by 2032.

ARTIFICIAL INTELLIGENCE (AI) MARKET TRENDS

AI Technologies Continue to Dominate With the Introduction of ChatGPT

According to OpenAI, their AI tool, ChatGPT, gained over one million users within five days of its November 2022 launch, significantly faster than other popular online services. ChatGPT can develop human-like text for various tasks, including writing, solving math problems, programming, and translations. In response, hyper scalers worldwide have been introducing their AI-powered chatbots to compete with ChatGPT and maintain market dominance. For instance, in February 2023, Baidu launched its AI chatbot Ernie bot in English and Wenxin Yiyan in Chinese, which led to a 13% increase in Baidu's shares in Hong Kong. The introduction of ChatGPT has spurred companies to invest in AI technologies, driving market demand. In 2024, generative AI is expected to expand across industries globally, with Bloomberg Intelligence projecting the market to grow to USD 1.3 trillion over the next decade, achieving a USD 40 billion market size by 2022. Generative AI leverages transformer-based text and diffusion-based image generation models to produce data resembling input information. ChatGPT and LLM (Large Language Model) applications are increasing in sectors like banking, healthcare, and travel, reducing human interference and enhancing efficiency.

Artificial intelligence software market

Size, by Product, - (USD Billion)

On-Premise

Cloud-based

Other Products

The Market will Grow

At the CAGR of:

24.0%

The Forecast Market

Size for in USD:

$61.38 Billion

Global Artificial Intelligence (AI) Software Market Dynamics

Global Artificial Intelligence (AI) Software Market Drivers

Advances in deep learning and machine learning technologies have significantly enhanced AI software capabilities, enabling complex data processing, pattern identification, and decision-making across various sectors. Businesses in healthcare, banking, retail, manufacturing, and automotive are increasingly adopting AI-powered solutions to improve business intelligence, customer experience, operational efficiency, and product innovation. The exponential growth in data from digital devices, sensors, social media, and online transactions allows AI to extract valuable insights, identify trends, and facilitate real-time decision-making. Companies are leveraging AI to automate tasks, optimize processes, and reduce time to market, resulting in cost savings, increased productivity, and shorter turnaround times. The rise of intelligent virtual assistants like Amazon Alexa, Google Assistant, and Apple Siri, alongside chatbots, drives demand for AI capable of natural language processing and conversational interactions. Industry-specific AI solutions, such as fraud detection in finance and medical imaging analysis in healthcare, address unique market challenges. Significant investments in AI research and development from governments, academia, and the private sector are propelling advancements in computer vision, natural language processing, and autonomous systems. AI as a Service (AIaaS) platforms and cloud computing from providers like Microsoft Azure, Google Cloud Platform, and Amazon Web Services make AI implementation more accessible to businesses without requiring significant upfront investments. AI software also enhances personalization, customer experience, and targeted marketing, fostering consumer engagement and loyalty. Regulatory support and ethical guidelines addressing bias, fairness, privacy, and security issues are crucial for building trust, transparency, and accountability in AI deployment across industries.

RESTRAINING FACTORS

Challenges Associated With the All-at-Once Adoption of AI Tools Can Hamper the Market Growth

Developing countries are facing a shortage of AI talent, along with the challenges of sudden AI tool adoption and the black box effect, which are hindering the market's progress. To address these issues, companies are enhancing their solutions by incorporating more ethical and transparent AI models to eliminate the black box effect. This effect refers to AI algorithms producing results that are difficult to validate, potentially containing hidden biases that are hard to detect. Consequently, users lack confidence and security in utilizing AI tools.

Furthermore, governments and businesses are investing in research institutions and educational programs to combat the global AI talent shortage. These efforts collectively indicate a promising future for the industry's rapid growth worldwide in the years to come.

Artificial intelligence software market

Share, by end user, (USD Billion)

12.6 Billion%

Voice Processing

Text Processing

Image Processing

Other End-Users

61.38 Billion

Total Market Size

USD (Billion),

24.0%

CAGR

-

Artificial Intelligence Software Market Segment

• by Type

1. On-Premise
2. Cloud-based

• by Application

1. Voice Processing
2. Text Processing
3. Image Processing

Key Players

• Advanced Micro Devices
• AiCure
• Arm Limited
• Atomwise, Inc.
• Ayasdi AI LLC
• Clarifai, Inc.
• Cyrcadia Health
• Enlitic, Inc.
• H2O.ai.
• HyperVerge, Inc.
• International Business Machines Corporation
• Intel Corporation
• Iris.ai AS.
• Life graph
• NVIDIA Corporation
• Sensely, Inc.
• Zebra Medical Vision, Inc.
• Microsoft Corporation
• Salesforce Inc.
• Samsung
• Amazon Web Services
• Qualcomm Inc.
• Baidu Inc.
• Wipro Ltd.
• IBM Corporation
• Tencent
• Alibaba Group
• Alphabet Inc. (Google LLC)
• NVIDIA Corporation
• H2O.ai
• Oracle Corporation
• Hewlett Packard Enterprise Development LP

Artificial intelligence software market

Size, by Product, - (USD Billion)

The Market will Grow

At the CAGR of:

24.0%

The Forecast Market

Size for in USD:

$61.38 Billion

KEY INDUSTRY DEVELOPMENTS:

• In March 2024, Microsoft and NVIDIA announced a collaboration focused on advancing AI for the healthcare and life sciences industry. This partnership leverages the strengths of both companies: Microsoft Azure's cloud infrastructure and advanced computing capabilities, alongside NVIDIA's DGX Cloud and Clara suite. The goal is to accelerate innovation and improve patient care through developments in areas like clinical research and drug discovery.
• In March 2024, NVIDIA launched new Generative AI Microservices designed to advance medical technology (MedTech), drug discovery, and digital health. These microservices leverage artificial intelligence (AI) to potentially improve healthcare technology.
• In January 2024, Google unveiled a new AI model, Lumiere. It is a text-to-video diffusion model capable of generating short video clips based on text descriptions. It can also be used to animate still images or apply a specific style to video generation.

• In December 2023, Google LLC released a new large language model (LLM) called Gemini. Gemini comes in three versions: Nano, Pro, and Ultra. A key feature of Gemini is its ability to handle multiple modalities, which differentiates it from competing LLMs.

  Artificial intelligence software market TO (USD BN)

  

  CAGR OF

  24.0%

  Artificial intelligence software market

  

  61.38 Billion%

Conclusion

The global market for Artificial Intelligence (AI) software is poised for significant growth, with an estimated value of US$ 12.6 billion in 2023 projected to reach US$ 61.38 billion by 2030 at a CAGR of 24.0%. Generative AI spending is expected to rise substantially, from 8% of AI software in 2023 to 35% by 2032. Advances in deep learning and machine learning technologies, growing industry adoption of AI-powered solutions, and the increasing volume and variety of data are key drivers of this market expansion. Companies are leveraging AI for automation, process optimization, and enhancing customer experiences. Despite challenges such as AI talent shortages and the black box effect, significant investments in AI research, ethical guidelines, and educational programs are fostering market growth. Key players like Microsoft, NVIDIA, and Google are spearheading innovations, particularly in healthcare and life sciences, further underscoring the transformative potential of AI technologies across various industries.