Artificial Intelligence Market Size, Share & COVID-19 Impact Analysis, By Component (Hardware, Software, and Services), By Function (Human Resources, Marketing & Sales, Product/Service Deployment, Service Operation, Risk, Supply-Chain Management and Others), By Deployment (Cloud, On-premises), By Industry (Healthcare, Retail, IT & Telecom, BFSI, Automotive, Advertising & Media, Manufacturing, and Others), and Regional Forecast, 2022-2029

Updated On: March, 2023

The artificial intelligence market size was valued at USD 328.34 billion in 2021 and is projected to grow from USD 387.45 billion in 2022 to USD 1,394.30 billion by 2029, exhibiting a CAGR of 20.1% during the forecast period. Based on our analysis, the global market had exhibited a rise of 150.0% in 2020 compared to 2019. The global COVID-19 pandemic has been unprecedented and staggering, with this technology experiencing higher-than-anticipated demand across all regions compared to pre-pandemic levels.

The report covers AI-based solutions such as Qualcomm AI Model Efficiency Toolkit, Facebook’s ParlAI, AWS Chatbots, OpenAI Codex, and Azure AI, among others. Artificial intelligence is being rapidly integrated into corporate processes around the world to improve business operations and consumer experience. Small and medium businesses are also investing in technology to improve the functionality and performance of their operations at a low cost. A significant development in 5G deployment, automation, cloud computing, and large databases, among others, are likely to drive technology demand.

Similarly, its ability to detect threats in real-time is expected to push its integration with cybersecurity solutions. For instance, in August 2021, Stellar Cyber, a U.S based security operations platform provider, announced a partnership with BlackBerry Limited. The partnership's objective is to promote the deployment of AI-powered security solutions for organizations and managed security service providers (MSSPs).

COVID-19 IMPACT

Increasing Demand for AI Technology in Healthcare Industry amid COVID-19 to Boost Market Growth

To meet the problems of the pandemic crisis, the demand for artificial intelligence in the healthcare sector increased considerably. The technology provides several tools and models that enhance traditional analytics and decision-making capabilities. This improves the accuracy and efficiency of diagnosis, treatments, and forecasting. For instance, according to the January 2022 study report, researchers at the Regenstrief Institute and Indiana University found that Machine Learning (ML) models could support public health decision-making during the pandemic.

Similarly, according to December 2021 research by the University of Waterloo and DarwinAI, artificial intelligence might aid doctors in assigning resources by recognizing patients who require Intensive Care Unit (ICU) treatment during the COVID-19 pandemic.

Also, the technology and its insights can also be very useful in drug discovery. For instance, the Tata Consultancy Services Innovation lab and Facebook AI are utilizing AI capabilities to understand the spread of viruses and identify potential molecules to target against the COVID-19 strain.

Further, during the pandemic, industries such as retail and e-commerce, manufacturing, transportation and logistics, among others, made significant investments in technology to balance the demand and supply ratio. As a result, the Artificial Intelligence Market had tremendous growth during the pandemic, and this growth is predicted to occur post-pandemic crisis.

LATEST TRENDS

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Growing Innovation in Artificial Internet of Things (AIoT) to Boost Market Opportunities

The adoption of connected devices is increasing exponentially across various applications. However, internet of things (IoT) devices have comparatively minimal memory. Thus, it becomes a complex process to collect and analyze data instantly. This has fueled the integration of artificial intelligence with IoT technology. AIoT supports boosting operational efficiency, improvising solutions, and services, enhances IoT scalability, assists in advanced risk management, and reduces cost and unplanned downtime.

The business can improve user experience by using AI-powered IoT solutions across retail analytics, manufacturing robots, self-driving cars, and more. This is expected to drive the demand for artificial technology. For instance, in August 2020, Aspen Technology, Inc., a software business specializing in asset optimization, has launched a new AIoT Hub.  It enables flexible and smooth data integration and mobility from sensors to the edge and cloud, accelerating the flow of visualizations and insights in capital-intensive industries.

Further, in May 2021, Bosch introduced a new AIoT platform, namely The Phantom Edge, that offers real-time data on energy use at manufacturing facilities. It is intended to improve industrial productivity by providing real-time warnings and notifications that provide timely actionable information. It also automates data collecting and accurately tracks downtimes by providing bias-free, timely, and precise data that managers can use to establish targets, evaluate performance, analyze, and enhance constantly.

DRIVING FACTORS

Higher Adoption of Hyper-Personalized Service to Drive the Market Growth

Increasing customer engagement is a critical influencing factor for a successful business in today's competitive and dynamic business environment. As a result, organizations are rapidly adopting artificial intelligence technology to give tailored and devoted services in real-time. Enterprises can use the technology to build hyper-personalized marketing strategies based on industry-specific client insights. This hyper-personalization increases profitability provides real-time data-driven decisions, lowers expenses, and improves customer pleasure.

In industries such as retail, e-commerce, financial institutions, healthcare, and other consumer-centric businesses, intelligent technology is being used to personally collaborate with consumers. According to a June 2020 report by IDC, more than half of the 2,056 IT and Line of Business (LoB) decision-makers responded customer experience is the main motivator for AI adoption.

Further, in June 2020, Salesforce released its Einstein recommendations for Trailhead. The company added AI capabilities to its online learning platform by introducing Einstein recommendations. In the new solution, learners would be guided to create a personalized, intelligent learning experience. It would also make recommendations based on the preferences of other learners. Therefore, the growing importance of personalized customer services across industries is likely to drive the artificial intelligence market growth.

RESTRAINING FACTORS

Limitations in Protecting Privacy to Restrict Market Growth

The market is likely to have difficulty with data privacy and varied algorithms. The technology employs machine learning and deep learning capabilities to provide users with relevant results. These tools, including search algorithms, recommendation engines, and adtech networks, could exploit the user's sensitive data.

Further, artificial intelligence algorithms create a new bit of information based on the historical data without the user's consent. According to March 2021 report by European Parliament, the volume of data produced across the globe is anticipated to reach 175 zettabytes in 2025 from 33 zettabytes in 2018. Owing to this, Europe introduced General Data Protection Regulation to control the misuse of personal data. This is likely to hamper the demand for the technology.

SEGMENTATION

By Component Analysis

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Capability to Offer Real-time Insights to Boost AI Software Demand

The Artificial Intelligence Market is segmented into hardware, software, and services based on components.

The software is anticipated to hold the highest market share during the furcate period due to its ability to extract data, offer real-time insights, and support decision-making. Some of the industry software solutions offered by the players are Cortana virtual assistance, Google Cloud Machine Language, IBM Watson, Tensorflow, and more.

The services segment is likely to grow with the fastest CAGR during the forecast period. The rising implementation of smart solutions is expected to drive the demand for AI services. These services harness the capabilities of the solutions that accelerate business operations.

In addition, AI hardware is estimated to gain steady growth owing to its support in enhancing process efficiency. The hardware includes artificial intelligence storage and servers such as OVHcloud servers, Broadberry servers, IBM Enterprise AI server, Intel Optane storage, DDN’s A3I storage, and more.

By Function Analysis

Increasing Demand for Risk Management in BFSI Sector to Propel the Market

Based on technology, the market is categorized into human resources, marketing & sales, product/service deployment, service operation, risk, supply-chain management and others.

Risk is expected to grow with the fastest CAGR during the forecast period owing the rapid digital transformation in the BFSI industry. The industry is likely to implement artificial intelligence for various risk management applications such as credit risk, Asset and Liability Management (ALM), liquidity risk, and market risk analysis. For instance, in December 2021, First National Bank of Omaha (FNBO) announced a partnership with a U.S based AI lending platform provider, Upstart, to scale its personal loan program across the country.

Service operation and product & service deployment are expected to dominate the market by holding significant market share during the projection period. Business organizations are expected to adopt this technology since it allows them to develop better products and deliver enhanced customer experiences. For instance, in March 2019, a survey report PWC estimated that digital product development would increase efficiency by almost 20% and reduce product launch time by 17%. In addition, the research also found out 41% of the surveyed firms are already using artificial intelligence within their product development.

By Deployment Analysis

Cloud Segment to Grow Rapidly Stocked by Presence of Renowned Companies

Based on deployment, the market is bifurcated into the cloud and on-premises.

Cloud is expected to grow with the highest CAGR during the forecast period. The increasing need for cloud-based tools, optimized infrastructure, and growing demand for virtualization and cloud storage are expected to drive cloud deployment. According to February 2022 report by Canalys in 2021, total cloud infrastructure services spending reached USD 191.7 billion, which was 35% up from USD 142.0 billion in 2020. During the year, the global economy reopened after lockdowns and customer confidence grew, leading to expanded contracts with cloud service providers.

With the growing awareness of the benefits of cloud-based solutions, the deployment of Natural Language Processing (NLP) and Machine Learning Tools (ML) tools in artificial intelligence are likely to grow in the cloud. Some of the key cloud-based AI services offered by the industry players are IBM Cloud, Azure Cognitive Services, and Einstein AI platform.

The on-premises are also expected to hold significant market share due to its in-house and more secured data storage offerings.

By Industry Analysis

IT & Telecom Segment to Dominate Backed by Need to Extract Insights

The market is categorized into healthcare, retail, IT & telecom, BFSI, automotive, advertising & media, manufacturing, and others based on the industry verticals.

Healthcare is likely to grow with the highest CAGR owing to the rapid implementation of artificial intelligence-powered solutions to boost patient care. Also, the pandemic has propelled the adoption of this technology in the healthcare sector. For instance, in March 2020, two Netherlands-based organizations Delft Imaging and Thirona collaborated to launch an AI-based COVID-19 diagnosis tool, namely CAD4COVID. The tool's objective was to provide chest X-rays analysis using deep learning.

The BFSI sector is likely to hold a significant market share during the forecasted period. The rising implementation of this technology in the BFSI industry to detect fraudulent activities, trading decisions, credit scoring applications, study financial market impact analysis, and risk management, among others, is likely to boost growth of the Artificial Intelligence Market.

The IT and telecom industry is implementing solutions to extract insights from the huge volume of big data to offer better customer services. For instance, according to December 2021 report by SwissCognitive, after presenting its chatbot, TOBi, for answering client questions, Vodafone Ltd. experienced a 68% improvement in client experience. Some of the IT and telecom sector solutions are ZeroStack, SAS Regulatory Risk Management, XenonStack, and Aria Networks.

Further, AI technology is rapidly being implemented in the automotive industry for various applications, including automotive design, supply chain management, manufacturing, and production. Similarly, the ability to boost product quality, reduce downtime, real-time demand forecasting, inventory management, and more AI-enabled solutions is expected to fuel its application in the manufacturing and automotive industry.

REGIONAL INSIGHTS

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Geographically, the market is fragmented into five major regions such as North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America. They are further categorized into countries.

North America held a significant chunk of the artificial intelligence market share in 2021, with the U.S. being a major contributor owing to rising government initiatives and investments in the market. The presence of various market players in the U.S. is expected to boost market growth. According to the RELX Emerging Tech Executive Report 2021, the adoption of this technology in the U.S has grown around 33% since 2018 and reached 81%.

The key industries in the country, such as retail, BFSI, manufacturing, healthcare, and others, are significantly investing in this technology.

Asia Pacific is expected to gain rapid growth of the Artificial Intelligence Market during the forecast period. The increasing 5G technology implementation in countries such as China, South Korea, Japan, Singapore, and India is likely to escalate the AI use cases in the region. Various nations have formed committed strategies to boost technology adoption across industries. For instance, The National AI Strategy of Singapore, Society 5.0 vision of Japan, Next Generation Artificial Intelligence Development Plan of China, and India’s AI for All vision, among others, is driving the market growth. Similarly, the countries such as Malaysia, Indonesia, Vietnam, the Philippines, Thailand, and more are significantly implementing the technology across various applications.

Europe is to hold a significant market share. Countries of the European Union are strategically investing in technology. For instance, according to December 2020 report by European Commission, the European Investment Fund allotted ~USD 171 million funds for the companies across Europe.

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The Latin America and Middle East & Africa market is likely to grow significantly during the forecast period. Government officials are actively involved in developing AI strategies across both regions. For instance, the Saudi Arabian government has established Saudi Data and AI Authority (SDAIA) to boost the market. In addition, in September 2021, SDAIA announced its plan to position Saudi Arabia as one of the top 10 countries in artificial intelligence and data.

Similarly, in April 2021, Brazil launched a national AI strategy to drive innovative application and research in its application.

KEY INDUSTRY PLAYERS

Increasing Strategic Acquisitions by Key players to Expand Their Product Offerings

The market is witnessing massive start-up enrollment. These players are collaborating with the industries such as manufacturing, healthcare, and retail, to offer customized artificial intelligence solutions. Whereas the prominent market players are focused on research and development, catering to the rising needs of the various industrial applications. To expand the presence and enhance its solution offerings, these players are acquiring key start-ups across the globe. For instance, Apple Inc. boosted its intelligent offerings by acquiring prominent startups in the market. Additionally, the expertise of these start-ups’ engineers and technicians helps develop innovative solutions.

July 2021 – Qualcomm Technologies acquired assets from Twenty Billion Neurons GmbH, including an AI research team and video datasets used by the AI community.

August 2021 – The OpenAI, LLC updated OpenAI Codex and launched a private beta program through API, which interprets users' natural language commands and executes them on their behalf.

List of the Key Companies Profiled:

• Amazon, Inc. (Washington, U.S.)


• IBM Corporation (New York, U.S.)


• Microsoft Corporation (Washington, U.S.)


• Salesforce.com Inc. (California, U.S.)


• Alphabet Inc. (Google LLC) (California, U.S.)


• NVIDIA Corporation (California, U.S.)


• Baidu, Inc. (Beijing, China)


• SAP SE (Walldorf, Germany)


• Oracle Corporation (Texas, U.S.)


• Hewlett Packard Enterprise Company (Texas, U.S.)


• SAS Institute Inc. (North Carolina, U.S.)

KEY INDUSTRY DEVELOPMENTS:

• July 2021 – Qualcomm Technologies, Inc. partnered with Foxconn Industrial Internet to create the Gloria AI Edge Box. It aims to increase the deployment of smart edge applications. The new system has a processing speed of 70 trillion operations per second. 


• July 2021 – Microsoft Corporation collaborated with a U.K.-based cyber security AI provider, Darktrace Holdings Limited, to offer self-learning AI to detect threats at maximum machine speed. The companies are offering high security against novel cyber threats through the partnership.

REPORT COVERAGE

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This Artificial Intelligence Market report examines key regions worldwide to help users have a better knowledge of the technology. Additionally, the research gives insights into the most recent industry and key market trends and an analysis of technologies that are being deployed at a quick rate on a global scale. It also highlights some of the market's growth-stimulating elements and restrictions, allowing the reader to understand the market thoroughly.

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