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The global Artificial Intelligence (AI) market size was USD 35.92 billion in 2020. The report covers solutions such as Facebook’s ParlAI, Qualcomm AI Model Efficiency Toolkit, AWS Chatbots, Azure AI, and OpenAI Codex, among others. The global impact of COVID-19 has been unprecedented and staggering, with AI witnessing a slightly negative impact on demand across all regions amid the pandemic. Based on our analysis, the global market exhibited a significant growth of 31.9% in 2020 as compared to the average year-on-year growth during 2017-2019. The market is projected to grow from USD 47.47 billion in 2021 to USD 360.36 billion in 2028 at a CAGR of 33.6% in the 2021-2028 period. The rise in compound annual growth rate is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.
Industries across the globe are rapidly incorporating artificial intelligence into their processes to improve business operations and customer experience. Small and medium businesses are also investing in technology to optimize the functionalities and performance at a minimal cost. The significant growth in 5G implementation, automation, cloud computing, huge databases, among others, are some of the factors expected to drive the technology demand. Similarly, its potential to identify threats in real-time is likely to drive its integration with cybersecurity solutions. For instance, in August 2021, Steller Cyber announced collaboration with BlackBerry to offer AI-powered end-to-end security for managed security service providers and enterprises. The companies integrated the technology to detect and prevent unknown and complex attacks before execution.
Increasing Demand for AI Technology in Healthcare Industry amid COVID-19 to Boost Market Growth
The demand for artificial intelligence in the healthcare system grew significantly to deal with the challenges during the pandemic crisis. The technology offers various tools and models that improvise traditional analytics and decision-making capabilities. This helps in enhancing the accuracy and efficiency of diagnostics, treatments, and predictions. For instance, in the US, the government is utilizing data from wearable devices to track the COVID-19 symptoms in the citizens. Similarly, the Indian healthcare provider, Aster DM, collaborated with the Indian hospitals to offer AI-powered support systems for the healthcare workers in telemedicine.
Additionally, 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, amid the pandemic, the industries such as retail, manufacturing, Automotive transportation, and logistics, among others, highly invested in the technology to balance the demand and supply graph. Thus, during the pandemic, the market witnessed significant growth, and similar growth is expected to register post-pandemic crisis.
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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, 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.
As per the SADA System survey 2018, various organizations initiated investing in AIoT technology to boost the competitive edge. Similarly, as per the IBM Global C-suite Study program, 19% of C-suite executives’ respondents are keen on augmenting AI-enable IoT solutions in their businesses. 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.
Higher Adoption of Hyper-Personalized Service to Drive the Market Growth
In today’s competitive and dynamic business environment, customer engagement is a crucial influencing factor to achieve success. This has resulted in the adoption of the technology to provide personalized and dedicated services in real-time. The technology offers industry-specific customer insights to enterprises to implement hyper-personalized marketing strategies. This hyper-personalization drives profits, offers real-time data-driven decisions, reduces costs, and optimizes customer satisfaction.
The industries such as financial institutes, retail and e-commerce, healthcare, and other people-centric service providers are shifting towards intelligent technology to personally collaborate with the customers. For instance, in 2018, Cogito, a Boston-based start-up, has developed a tool based on deep learning and behavioral science for real-time conversation analysis. It offers personalized service by analyzing the tone of the customers. The bot has supported the agents in real-time and was able to achieve 26 percent improvement in its promotion and issue resolution procedures. Thus, the increasing importance of personalized customer services across industries is likely to drive the market.
Limitations in Protecting Privacy to Restrict Market Growth
The market is likely to face challenges regarding data privacy and varying algorithms. The technology uses machine learning and deep learning tools to offer related results to the users. These tools, such as recommendation engines, search algorithms, and adtech networks, can exploit the sensitive data of the user. Further, AI algorithms create a new bit of information based on the historical data without the consent of the user. 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.
Capability to Offer Real-time Insights to Boost AI Software Demand
Based on components, the market is segmented into hardware, software, and services.
Software to gain maximum revenue share owing to its ability to extract data, offer real-time insights, and support in decision making. Some of the industry software solutions offered by the players are Google Cloud Machine Language, Cortana virtual assistance, Tensorflow, IBM Watson, and more.
The services segment is to gain rapid growth during the forecast period. The rapid implementation of intelligent solutions is driving the demand for AI services. These services harness the capabilities of the solutions that accelerate business operations. AI hardware segment is anticipated to gain steady growth owing to its support in enhancing process efficiency. The hardware includes AI servers and storage such as IBM Enterprise AI server, OVHcloud servers, Broadberry servers, DDN’s A3I storage, Intel Optane storage, and more.
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Increasing Demand for Business Intelligence to Drive Machine Learning Segment
Based on technology, the market is categorized into computer vision, machine learning, natural language processing, and others.
The machine learning segment is expected to gain the maximum market share owing to its capabilities in spotting patterns, trends and extracting data. Some of the machine learning solutions are Microsoft Azure Machine Learning Studio, AWS SageMaker, SAP Leonardo Machine Learning, and more. These solutions help in enhancing the capabilities of business monitoring.
The natural language processing (NLP) segment is set to gain rapid growth during the forecast period. The adoption of NLP is increasing across industries to understand customer preferences, changing trends, buying behavior, decision-making process, and more. For instance, in August 2021, India-based yellow.ai launched an AI-powered bot using a self-learning NLP system to deliver a better customer experience based on language, sentiment, dialect, workflow, and more. Similarly, the increasing focus on automation and quality inspection is expected to surge the demand for computer vision across industries.
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 gain rapid growth during the forecast period. Some of the key cloud-based AI services offered by the industry players are IBM Cloud, Azure Cognitive Services, and Einstein AI platform. The increasing need for cloud-based tools, optimized infrastructure, and growing demand for virtualization and cloud storage are expected to drive cloud deployment.
The on-premises to dominate the segment share owing to its in-house and more secured data storage offerings.
IT & Telecom Segment to Dominate Backed by Need to Extract Insights
Based on the industry, the market is categorized into healthcare, retail, IT & telecom, BFSI, automotive, advertising & media, manufacturing, and others.
The IT and telecom segment is set to dominate the market share during the forecast period. Some of the solutions for the IT and telecom sector are XenonStack, ZeroStack, Aria Networks, SAS Regulatory Risk Management, among others. The industry is implementing solutions to extract insights from the huge volume of big data to offer better customer services.
Retail is expected to showcase rapid growth owing to the increasing focus on providing an enhanced shopping experience. Similarly, the ability to boost product quality, reduce downtime, real-time demand forecasting, inventory management, and more of the AI-enabled solutions is expected to fuel its application in the manufacturing industry.
The implementation of AI in the BFSI industry for trading decisions, detecting fraudulent activities, credit scoring applications, studying financial market impact analysis, and more are likely to drive artificial intelligence market share. Healthcare is likely to grow significantly owing to the rapid implementation of AI-powered solutions to boost patient care.
North America Artificial Intelligence Market Size, 2020 (USD Billion)
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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 share of the market in 2020, 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 US is expected to boost artificial intelligence (AI) market growth. The key industries in the country, such as retail, BFSI, manufacturing, healthcare, and others, are significantly investing in the technology.
The Asia Pacific to gain rapid growth 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 the adoption of the technology across industries. For instance, Society 5.0 vision of Japan, The National AI Strategy of Singapore, and India’s AI for All vision, Next Generation Artificial Intelligence Development Plan of China, among others, is driving the market growth. Similarly, the countries such as Indonesia, Malaysia, Vietnam, Thailand, the Philippines, and more are significantly implementing the technology across various applications.
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Europe is set to rank second in terms of the global market share. Countries of the European Union are strategically investing in technology. For instance, the European Investment Fund allotted USD 111 million funds for the AI start-ups in 2020. The market in Latin America and Middle East & Africa is expected to grow significantly during the forecast period. For instance, the Saudi Arabian government established Saudi Data and AI Authority (SDAIA) to boost the market. Similarly, Brazil, in April 2021, launched a national AI strategy to drive innovative application and research in its application.
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 players of the market 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 in developing innovative solutions.
July 2021 – Qualcomm Technologies, Inc. acquired an on-board AI research team and assets such as the AI research community’s high-quality video dataset from Twenty Billion Neurons GmbH.
August 2021 – OpenAI, LLC updated OpenAI Codex and launched private beta through API. OpenAI Codex helps in translating natural language into codes. The new version interprets the command and executes it on the user’s behalf.
An Infographic Representation of Artificial Intelligence Market
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The global artificial intelligence market report highlights leading regions across the world to offer a better understanding of the user. Furthermore, the report provides insights into the latest industry and market trends and analyzes technologies deployed at a rapid pace at the global level. It further highlights some of the growth-stimulating factors and restraints, helping the reader gain in-depth knowledge about the market.
Value (USD billion)
Component; Technology; Deployment; Industry; and Geography
The market is projected to reach USD 360.36 billion by 2028.
In 2020, the market size stood at USD 35.92 billion.
The market is projected to grow at a CAGR of 33.6%.
The machine learning segment is likely to lead the market.
Increasing investments in AI technology to enhance the business operation and customer experience is likely to drive market growth.
Amazon.com, Inc., Apple Inc., Facebook LLC, OpenAI, LLC, Qualcomm Technologies, Inc., and IBM Corporation are the top players in the market.
North America is expected to hold the highest market share.
Asia Pacific is expected to grow at a significant CAGR.
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