Artificial Intelligence (AI) Market by Component (Hardware, Software, and Services), Deployment (Cloud and On-Premise), Application (Virtual Assistants/Chatbots, Forecasts & Modeling, Text Analytics, Speech Analytics, Computer Vision, Predictive Maintenance, and Others), and End User Industry (BFSI, Government, Aerospace & Defense, Automotive, Healthcare IT & Telecom, Manufacturing, Education, Retail & E-commerce, Energy & Utilities, Media & Entertainment, and Others) – Global Opportunity Analysis and Industry Forecast, 2024–2030

Artificial Intelligence (AI) Market Overview

The global Artificial Intelligence (AI) Market size was valued at USD 0.86 billion in 2023 and is predicted to reach USD 12.43 billion by 2030, registering a CAGR of 46.5% from 2024 to 2030.

Artificial Intelligence (AI) stands at the forefront of technological innovation, reshaping industries, revolutionizing processes, and redefining the way we interact with technology. This cutting-edge field of computer science focuses on developing intelligent machines capable of simulating human cognitive functions such as learning, problem-solving, and decision-making. From self-driving cars and virtual assistants to predictive analytics and medical diagnostics, AI's applications are diverse and far-reaching, promising to transform the way we live, work, and engage with the world around us. As AI continues to advance rapidly, its potential to drive progress and shape the future is both exciting and profound.

Rapidly Increasing Data Availability Fuels the Artificial Intelligence (AI) Market

The exponential growth in data availability globally serves as a catalyst for the demand for AI. With the proliferation of digital devices and online activities, vast amounts of data are generated daily, providing a rich resource for AI model development and training. AI algorithms rely on this data to discern patterns, correlations, and insights that drive intelligent decision-making and automation.

As organizations seek to extract value from this wealth of information, the demand for AI solutions that can effectively process and analyze large datasets continues to rise, reinforcing the symbiotic relationship between AI advancement and data availability. As per the NMSC, the data center industry reached USD 214 billion in 2023 and it is projected to surpass USD 421.4 billion, with a CAGR of 10.2% from 2024 to 2030.

Rising Trend of Automation Boost the Demand For Artificial Intelligence

The increasing trend of automation across industries is propelling the demand for AI technologies, as businesses seek to improve efficiency, reduce costs, and enhance productivity. Traditional automation methods are being complemented and enhanced by AI-powered solutions, which offer the ability to analyze large volumes of data, make intelligent decisions, and adapt to changing conditions.

AI-driven automation provides versatility, adaptability, and efficiency gains, leading to significant cost savings and improved operational performance. For instance, in manufacturing, AI-powered automation systems integrated with Internet of Things (IoT) devices helps to optimize production processes, monitor equipment performance in real-time, and predict maintenance needs, enabling proactive maintenance and minimizing downtime.

By empowering businesses to make better-informed decisions, address skills gaps, and fill labor shortages, AI technologies are playing a pivotal role in driving digital transformation and innovation across industries worldwide. As per the Deloitte report, the industrial IoT market is estimated to grow at a CAGR of 16.7% from 2019 to reach USD 263.4 billion by 2027.

Growing Emphasis on the Digital Transformation Initiatives Drives the AI Landscape

The growing emphasis on digital transformation initiatives is driving the landscape of the AI industry, as organizations worldwide prioritize leveraging AI technologies to accelerate their transformation efforts. With a focus on data-driven decision-making, process automation, enhanced customer experiences, innovation, and agility, organizations are turning to AI to gain insights, streamline operations, and stay competitive in the digital age.

According to the Harvard Business Review, 89% of large companies worldwide currently undergoing digital and AI transformation initiatives, they have realized only 31% of the anticipated revenue increase and 25% of the projected cost reductions from these endeavors.

AI technologies enable organizations to analyze vast amounts of data, automate repetitive tasks, personalize customer interactions, drive innovation, and adapt quickly to changing market dynamics. As digital transformation becomes a strategic imperative for organizations across industries, the demand for AI technologies that support these initiatives continues to rise, shaping the future of business and technology in the digital era.

Issues Related to Data Privacy Associated With the AI Hinders Growth

Data privacy concerns pose significant challenges to the growth and adoption of AI, driven by increasing collection and use of personal data. Issues such as unauthorized access, misuse, and biased decision-making undermine trust in AI. Varying regulations and jurisdictional disputes hinder consistent data privacy standards. Addressing these concerns requires robust data protection, transparent governance, and ethical AI development to foster trust and unlock AI's full potential.

Extensive Expansion of AI Across Various Industries Creates Opportunity

The widespread incorporation of artificial intelligence (AI) across various sectors signifies a fundamental shift in business operations and innovation. In healthcare, AI is reshaping patient care with personalized medicine, utilizing patient data and AI algorithms to customize treatment plans and therapies, resulting in better outcomes and cost savings.

In finance, AI-driven predictive analytics and algorithmic trading are optimizing risk management and investment strategies, empowering financial institutions to make real-time data-driven decisions and enhance operational efficiency. Within manufacturing, AI-enabled predictive maintenance is revolutionizing traditional reactive practices by using sensor data and machine learning to forecast equipment failures proactively, reducing downtime and boosting productivity.

Retail is experiencing a revolution with AI-driven recommendation systems and personalized shopping experiences, leveraging customer data and AI algorithms to provide tailored product suggestions and improve customer interaction.

North America Holds the Predominant Share of the Global AI Market

North America maintains its leading position in the Artificial Intelligence (AI) market share, poised to sustain dominance due to factors such as increased AI integration in healthcare, driving advancements in drug delivery and digital health. 

In 2024, NVIDIA introduced over 24 enterprise-grade AI microservices at GTC, targeting healthcare with innovations in imaging, natural language processing, and drug discovery workflows, signifying a significant leap in healthcare technology.

Moreover, the rising emphasis towards utilizing AI into defense industry is fueling the demand for the market across the region. As an example, Pentagon announced to allocate USD 17.2 billion for science and technology projects in fiscal 2025, prioritizing AI, space, and integrated sensing.

The Undersecretary of Defense for Research and Engineering, identifies 14 critical technology areas crucial for military modernization, with trusted AI and autonomy, space, and integrated sensing receiving the bulk of funding. This investment underscores the Pentagon's commitment to leveraging advanced technology for enhancing military capabilities.

In addition, the presence of key market players, such as Alphabet Inc., Nvidia Corporation, Intel Corporation, and Amazon Inc., have adopted various strategies to expand their businesses and drive the AI market. Notably, Nvidia introduced Clara Holoscan MGX, an AI computing platform tailored for medical devices, ensuring compliance with essential regulatory standards for the development and deployment of real-time AI applications.

Asia-Pacific Region Witnesses Substantial Growth in the Global AI Industry

Asia-Pacific shows steady growth in the AI market owing to the growing adoption of AI in retail & e-commerce for enhanced personalization, leveraging recommendation systems and chatbots, to improve customer experiences and drive loyalty.

In 2024, Rakuten Ichiba launched Rakuten AI University, offering video-based e-learning resources to its 57,000 merchants. This initiative aims to seamlessly integrate AI solutions into daily business operations, with a focus on leveraging the RMS AI Assistant (Beta) for enhanced efficiency and store management.

Moreover, the rising integration of AI in BFSI for enhanced risk management and fraud detection capabilities, utilizing machine learning algorithms to analyze real-time financial data and mitigate risks effectively boost the AI market. For instance, HSBC Introduced AI-driven structured product for private banking clients in asia that leverages IBM Watson's AI engine for resilient returns in dynamic market conditions.

Additionally, the adoption of AI by government agencies to boost efficiency and automation in administrative processes. Government bodies are leveraging AI technologies to streamline workflows, improve service delivery, and make data-driven decisions, all with the aim of enhancing the overall effectiveness of governance. Notably, Asian governments are actively working towards achieving interoperability in their artificial intelligence (AI) governance frameworks, aiming to streamline the regulatory landscape and foster a more cohesive approach to AI development and deployment across the region.

Competitive Landscape

The promising players operating in the global AI industry include IBM Corporation, Google LLC, Microsoft Corporation, NVIDIA Corporation, Intel Corporation, Amazon Web Services (AWS),  Oracle Corporation, Dynatrace, Inc, Meta Platforms, Inc., and Salesforce, Inc., among others. These players are engaged in various investment, collaboration, and product launching across various regions to maintain their dominance in the global AI market. 

For instance, in May 2024, Microsoft announced to invest USD 2.2 billion to drive Malaysia's cloud and AI transformation, focusing on digital infrastructure, AI skilling, and cybersecurity enhancements. This significant investment aims to boost Malaysia's digital capabilities and position the country for growth in the global tech landscape.

Also, in March 2024, NVIDIA launched generative AI microservices for developers to create and deploy generative AI copilots across NVIDIA CUDA GPU installed base. It aims to create and deploy custom applications on their own platforms while retaining full ownership and control of their intellectual property.
Moreover, in February 2024, IBM and Wipro collaborated to provide enhanced AI services and assistance to customers, fostering the development of integrated and enterprise-ready AI solutions through their expanded partnership.

In addition, in February 2024, Google rebrands its AI services as Gemini, introducing a free version and a USD 20/month advanced subscription accessible through a new app. Dubbed "Ultra 1.0," the advanced AI technology offers tutoring, programming tips, and content generation, aligning with Google's focus on expanding AI capabilities on smartphones alongside recent Pixel and Samsung Galaxy releases.

Artificial Intelligence (AI)  Market Key Segments

By Component

• Hardware

  • AI Accelerators

  • Memory Units

  • Sensors

  • Storage Devices

• Software

  • AI Platforms

  • ML Tools

  • NLP Tools

  • Others

• Services

  • Professional

    • System Integration & Deployment    

    • AI Technology Consulting    

    • Support & Maintenance    

  • Managed

By Deployment 

• On-premises

• Cloud

By Application

• Virtual Assistants/Chatbots    

• Forecasts & Modelling    

• Text Analytics    

• Speech Analytics    

• Computer Vision    

• Predictive Maintenance    

• Others    

By End User Industry

• BFSI    

• Government    

• Aerospace and Defense    

• Automotive    

• Healthcare

• IT & Telecom    

• Manufacturing    

• Education    

• Retail & E-commerce    

• Energy & Utilities    

• Media & Entertainment    

• Others

By Region

• North America

  • The U.S.

  • Canada

  • Mexico

• Europe

  • The UK

  • Germany

  • France

  • Italy

  • Spain

  • Denmark

  • Finland

  • Netherlands

  • Norway

  • Russia

  • Sweden

  • Rest of Europe 

• Asia-Pacific

  • China

  • Japan

  • India

  • South Korea

  • Australia

  • Indonesia

  • Singapore

  • Taiwan

  • Thailand

  • Rest of Asia-Pacific

• Rest of World

  • Latin America

  • Middle East

  • Africa

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