Artificial intelligence (AI) software is expected to grow nearly four-fold in the next five years as business requirements demand specific use cases and applications areas, according to new research from International Data Corp (IDC).
The AI software market will rise to $251 billion in 2027 up from $64 billion in 2022, managing a compound annual growth rate (CAGR) of 31.4%.
AI software, either AI-centric or non-AI centric, includes AI platforms, AI applications, AI system infrastructure software and AI application development and deployment (AD&D) software. This does not include generative AI platforms and applications, which is forecast to grow to $28.3 billion on its own by 2027, IDC said.
"The momentum behind investments in AI and automation technologies remains unwavering despite economic uncertainty and shifting market dynamics,” said Raghunandhan Kuppuswamy, research manager for AI and automation at IDC. “Businesses are realizing that utilizing cutting-edge technology is not only a strategic necessity but also a crucial factor in achieving long-term success.”
Kuppuswamy said companies are making AI a strategic necessity despite risks and challenges because AI is viewed as future proofing operations and to remain ahead of the competition. The U.S. seeks to minimize risk to AI in a recent executive order signed by the Biden Administration. The order also will work to establish standards to advance innovations.
The largest category for AI software will be AI applications that will account for about one-third of the market revenue in 2023 and will have a CAGR of 21.1% during the forecast period, IDC said. This category includes applications like:
- Collaborative AI
- Content workflow and management
- Enterprise resource management
- Supply chain management
- Production and operations
- Engineering AI
- Customer relationship management
The second largest category in terms of revenue in 2023 is AI platforms consisting of those models and applications that mimic human cognitive abilities like intelligent assistants. This category will have a CAGR of 35.8% during the period.
"The AI landscape is changing rapidly,” said Ritu Jyoti, group VP of AI and automation at IDC. “Convergence of traditional AI with generative AI will lead to cutting-edge solutions that combine decision efficacy with creative ingenuity. As businesses continue to invest in AI, they should be prepared to address challenges and prioritize ethical considerations to maximize the long-term ROI."
The full research can be found in IDC’s Worldwide Artificial Intelligence Software Forecast.
