AI technology: Market size and growth forecasts

Our analysis focuses on AI technology: software-based systems that use data inputs to make decisions on their own. Developments in AI have been particularly enhanced by ML using neural networks and the widespread availability of computing power, data storage, and input devices such as smartphones and digital cameras.  

According to GlobalData forecasts, the total AI market, including software, hardware, and services, will be worth $1,036.8 billion in 2030, having grown at a compound annual growth rate (CAGR) of 39.1% from $103.0 billion in 2023. The specialized applications category is currently the largest market segment, but AI platforms are the fastest-growing. That said, it is important to understand that a significant proportion of AI hardware revenues and consulting and support services sales are driven by the sale of specialized AI applications, such as CV and conversational platforms.

Given the significant interest in generative AI, particularly since the launch of ChatGPT by OpenAI in late 2022, GlobalData also provides a separate view of the global AI market that shows the expected contribution of this novel technology to the mix. The generative AI portion of the AI market is expected to be worth $33.0 billion in 2027, up from just $1.8 billion in 2022 at a CAGR of 91.4%.

From a product or service perspective, the global specialized AI applications market will be worth $512.1 billion in 2030, up from $39.3 billion in 2023 at a CAGR of 44.3%. GlobalData breaks down its forecasts for this market into specific sub-categories, including conversational platforms, computer vision (CV), and horizontal applications embedded with AI-driven features such as image recognition, natural language processing, or sentiment analysis. CV is the largest sub-category, but conversational platforms is the fastest growing, so we expect its contribution to exceed CV's by 2027.   

The global CV market will be worth $125.1 billion in 2030, up from $19.0 billion in 2023 at a CAGR of 30.9%. Several factors will drive this growth. Firstly, the huge number of digital images available will enable the extraction of ever more meaningful information from visual data, leading to the increased sophistication of CV algorithms. Countless images and videos from the built-in cameras of our mobile devices, alongside visual data collected by fixed cameras and even drones, will be used to train algorithms and deliver a higher level of recognition. Secondly, end-user demand across different industries—such as smart cities, healthcare, transport, and retail—will fuel growth.  

The global conversational platforms market will be worth $340.8 billion in 2030, up from $9.6 billion in 2023 at a CAGR of 66.4%. This growth will partly be driven by the significant improvement in language models since the release of GPT-3 by OpenAI in 2020, which has broadened the capabilities and applications of conversational platforms.

The rapid growth in the volume of data is prompting demand for computing resources to analyze that data. AI applications will be boosted by the increased availability of AI chips capable of handling more complex processing, including cloud-based graphic processing units (GPUs) and custom AI accelerators based on application-specific integrated circuits (ASICs). These chips will be developed by established suppliers like Nvidia, AMD, and Intel and by the tech giants, which are increasingly designing their own.  

For example, in 2018, Alibaba entered the semiconductor industry by launching its PingTouGe subsidiary, which develops computer chips specifically designed for AI. Alibaba now uses its Yitian chips in its cloud business. Likewise, Baidu has been designing its own chips, branded Kunlun, since 2018, and in 2021, it also spun off its semis design business. Alphabet, Amazon, and Microsoft have all developed custom AI accelerators. Finally, advances in convolutional neural networks (CNNs) will also play a major role in developing AI applications, as will the availability of skilled analysts shifting from universities into industries.   

From a geographic perspective, North America had a 28% share of 2023 global AI revenues, with the Asia-Pacific region contributing 35%. Given the diverging regulatory posture around data privacy and the use of AI between regions, we expect Western Europe to lose market share to Asia Pacific over the next few years.   

However, some inhibiting factors will hold back the growth of the global AI market. For instance, ethical concerns will result in new regulations, especially for the private use of surveillance technology. In addition, the ongoing trade dispute between the US and China will likely impact technological progress and adoption. 

GlobalData’s Tech Sentiment Polls Q1 2024 illustrated the potential of AI technologies for business users. Well over half of the respondents felt that AI would cause significant disruption to their sectors, with only 13% believing there would be no disruption. Significantly, 41% of respondents said AI was already disrupting their business, up from 25% about a year ago. A further 32% believe it will cause tangible disruption within four years, even though the technology is only at an early stage of uptake and development.