Generative AI Market - Global Outlook & Forecast 2024-2029

Generative AI Market - Global Outlook & Forecast 2024-2029

The global generative AI market is expected to grow at a CAGR of 37.65% from 2023-2029.

TECHNOLOGICAL ADVANCEMENTS

Technological advancements in the generative AI market drive insightful transformations across industries, revolutionizing how businesses operate and interact with customers. These advancements involve various innovations spanning hardware, software, algorithms, and data analytics, collectively propelling the capabilities and applications of AI.

Gen-AI technological progress is a breakthrough in deep learning algorithms and neural network architectures. Deep learning techniques, inspired by the structure and function of the human brain, have enabled AI systems to achieve remarkable feats in tasks such as image recognition, natural language processing, and decision-making. Moreover, advancements in neural network architectures, such as convolutional neural networks (CNNs) and recurrent neural networks (RNNs), have significantly enhanced the efficiency and accuracy of AI models, paving the way for more sophisticated applications in areas like healthcare, finance, and autonomous vehicles.

Additionally, merging AI with other emerging technologies fuels exponential growth and innovation in the global generative AI market. For instance, integrating AI with big data analytics enables organizations to extract valuable insights from vast and complex datasets, driving informed decision-making and predictive capabilities. Similarly, the combination of AI with the Internet of Things (IoT) facilitates the creation of intelligent and interconnected systems capable of sensing, analyzing, and responding to real-time data streams in diverse environments.

In addition to software advancements, significant progress has been made in AI hardware, particularly in developing specialized processing units optimized for AI workloads. Graphics processing units (GPUs), tensor processing units (TPUs), and field-programmable gate arrays (FPGAs) are among the key hardware technologies powering the acceleration of AI computations, enabling faster training and inference tasks. Moreover, quantum computing advancements promise to exponentially increase AI's computational power, potentially unlocking new machine learning and optimization frontiers.

Moreover, the democratization of AI tools and platforms is democratizing access to AI capabilities, empowering individuals and organizations of all sizes to harness the power of AI for innovation and problem-solving. Open-source frameworks such as TensorFlow, PyTorch, and Scikit-Learn, coupled with cloud-based AI services from major providers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform, are lowering the barriers to entry and fostering a vibrant ecosystem of AI development and deployment.

Therefore, technological advancements in the generative AI market drive unprecedented progress and innovation, unlocking new opportunities for businesses, researchers, and society. From breakthroughs in deep learning algorithms to the convergence of AI with other emerging technologies, the trajectory of gen-AI continues to evolve rapidly, shaping the future of industries and reshaping the human experience.

MARKET TRENDS & DRIVERS

Rising Investments and Fundings

The generative AI market is experiencing a surge in growth due to the significant funding from industry giants. These substantial investments propel the development and adoption of Gen-AI technologies across various sectors. Big players in the IT and tech industry, such as Google, Microsoft, and IBM, are investing substantial funds into Gen-AI infrastructure and research & development. For instance, according to a news article published in March 2024, Microsoft and OpenAI are expected to allocate between $100 billion and $115 billion investment toward a new supercomputer named Stargate, as the technology-focused business publication The Information reports. This investment is expected to create an infrastructure supporting generative artificial intelligence (AI) applications.

Rapid Adoption of Artificial Intelligence

The rapid adoption of Artificial Intelligence (AI) is transforming industries globally, reshaping business operations, and driving innovation across various sectors. AI technologies, including machine learning, natural language processing, and computer vision, have grown significantly in recent years, offering organizations powerful tools to automate tasks, improve decision-making, and deliver personalized customer experiences. For instance, in 2023, the NSF announced that it would invest $140 million in establishing seven new AI research institutes in the United States.

INDUSTRY RESTRAINTS

Shortage of Skilled Workforce

The shortage of skilled workers poses a significant challenge for the generative AI market. Developing and deploying Gen-AI solutions requires diverse skills, including expertise in machine learning, data science, software engineering, and domain-specific knowledge. For instance, Microsoft’s 2023 Work Trend Index highlights that 82% of leaders recognize the pressing need to prepare their workforce for the expanding AI landscape. Additionally, organizations like Amazon, Ericsson, and PwC are heavily investing in upskilling and reskilling initiatives to build employees’ AI capabilities. Furthermore, in a recent survey, 40% of CEOs cite a lack of AI-related knowledge and skills within their HR team as the biggest obstacle to AI integration.

SEGMENTATION INSIGHTS

INSIGHTS BY COMPONENT

The global generative AI market by component is segmented into services and software. The service component segment is expected to be the largest in the global gen-AI market. The industry is gaining momentum due to the rising demand for effectiveness and efficiency among various industries and individuals, the improving accuracy, increasing disposable income, and supporting norms regarding gen-AI support the services of gen-AI during the forecast period. The gen-AI service segment encompasses a range of offerings designed to assist users in generating content, enhancing creativity, and automating tasks. These services typically leverage deep learning techniques, such as generative adversarial networks (GANs) and autoregressive models, to produce outputs that mimic or augment human creativity.

Segmentation by Component

• Services
• Software

INSIGHTS BY TYPE

The global generative AI market by type is segmented into text, audio, video, image, and others. The text-type segment held the largest segmental market share in 2023. Text gen-AI represents a powerful technology with a wide range of applications in content generation, language processing, and conversational interfaces. While text gen-AI offers many benefits, including efficiency, scalability, and creativity, it poses challenges related to context understanding, bias, and ethical concerns. By addressing these challenges and leveraging ongoing advancements in AI research, text gen-AI can drive innovation and transform how end-users communicate, create, and interact with information in the digital age.

Segmentation by Type

• Text
• Audio
• Video
• Image
• Others

INSIGHTS BY BUSINESS MODEL

The subscription-based business model segment dominated the global generative AI market share 2023. A subscription-based Gen-AI business model is where customers pay a recurring fee to access Gen-AI software or services on a subscription basis. Instead of purchasing the software outright, customers subscribe to use it for a period, typically monthly or yearly. This model allows businesses to access the benefits of Gen-AI without large upfront costs and provides flexibility in usage based on changing needs. Subscription-based models often include regular updates, support, and access to new features, offering ongoing value to subscribers. Subscription-based models also lower entry barriers for businesses adopting Gen-AI technology.

Segmentation by Business Model

• Subscription Based
• Ad Based

INSIGHTS BY END USER

The enterprise end-user segment holds the most significant share of the global generative AI market in 2023. Gen-AI is restructuring enterprises by offering innovative solutions to diverse challenges across industries. From retail and entertainment to healthcare and finance, gen-AI is revolutionizing how businesses operate, driving efficiency, enhancing customer experiences, and fostering innovation. As gen-AI technologies evolve and mature, businesses can expect to see even greater benefits, from improved decision-making and productivity to new opportunities for growth and competitive advantage.

Segmentation by End-user

• Enterprises
• Individual

INSIGHTS BY ENTERPRISES

The global generative AI market by enterprises is segmented into media & entertainment, telecommunication, retail, public sector, financial services, healthcare, and others. The media & entertainment holds the most significant segmental market share in 2023. Generative Artificial Intelligence (gen-AI) is revolutionizing the media and entertainment industry by offering innovative solutions that enhance content creation, production, and audience engagement. With gen-AI, media professionals can leverage advanced algorithms to generate realistic images, videos, and audio, automate repetitive tasks, and personalize content for diverse audiences. Also, gen-AI enhances virtual reality (VR) and augmented reality (AR) experiences by creating realistic digital avatars and personalized interactions. These immersive experiences engage users more effectively, adding realism and interactivity to VR/AR environments.

Segmentation by Enterprises

• Media & Entertainment
• Telecommunication
• Retail
• Public Sector
• Financial Services
• Healthcare
• Others

INSIGHTS BY MODEL

The global generative AI market by model is segmented into diffusion models, generative adversarial networks, transformer based models, variational autoencoders, and others. The diffusion model segment is expected to be the largest in the global gen-AI market. Diffusion-based gen-AI models revolutionize various industries and enhance user experiences. These models leverage sophisticated algorithms to generate content, images, and text, catering to diverse user needs and preferences. The primary drivers are the increasing demand for personalized and interactive content across marketing, e-commerce, and entertainment sectors.

Segmentation by Model

• Diffusion Model
• Generative Adversarial Networks
• Transformer Based Models
• Variational Autoencoders
• Others

GEOGRAPHICAL ANALYSIS

In recent years, the increasing disposable income, the growth in adoption of AI technologies, and the expansion of various industries globally have driven the demand for gen-AI solutions across the globe. Implementing supportive government and private bodies' regulations also fuels the demand for gen-AI solutions. The global generative AI market is highly developed in North America, Europe, and APAC, owing to the increasing penetration of gen-AI technology. On the other hand, Latin America and the Middle East are highly potential markets with enough opportunity for growth. North America dominated the global generative AI market share, with a revenue share of over 42% in 2023. The North American gen-AI market is experiencing significant growth and evolution, driven by a convergence of technological advancements and increasing demand for AI-driven solutions across various industries. The key drivers behind the rapid expansion of the North American gen-AI market are the increase in AI algorithms and platforms. Innovations in deep learning, natural language processing, and computer vision have enabled gen-AI systems to create complex and realistic content autonomously.

Segmentation by Geography

• North America
• The U.S.
• Canada
• Europe
• Germany
• The U.K.
• France
• Italy
• Spain
• Poland
• Norway
• APAC
• China
• Japan
• India
• Australia
• South Korea
• Indonesia
• Singapore
• Philippines
• Malaysia
• Latin America
• Brazil
• Mexico
• Argentina
• Middle East & Africa
• Saudi Arabia
• Israel
• UAE
• South Africa

COMPETITIVE LANDSCAPE

The global generative AI market is highly competitive, with the presence of big corporations and start-up companies. The rapid technological changes adversely impact market vendors as consumers increasingly expect continuous technology-enabled innovations and upgrades to existing products. The present scenario drives vendors to alter and refine their unique value propositions to achieve a strong market presence. The key players in the global generative AI market are Anthropic PBC, Amazon Web Services, Inc., Cohere, Glean Technologies, Inc., Google LLC (Alphabet), Hugging Face, Jasper AI Inc., Microsoft Corporation, Nvidia Corporation, and OpenAI. Further, the presence of diversified global and regional vendors characterizes the market. Many big corporations collaborate with start-ups to enhance several product features by accuracy, number of use cases, and generating various types of content such as text, image, video, audio, etc. Such initiatives are expected to enable vendors to gain a competitive edge over other vendors in the market.

Key Company Profiles

• Anthropic PBC
• Amazon Web Services, Inc.
• Cohere
• Glean Technologies, Inc.
• Google LLC (Alphabet)
• Hugging Face
• Jasper AI Inc.
• Microsoft Corporation
• Nvidia Corporation
• OpenAI

Other Prominent Vendors

• Adept AI
• Adobe
• Alphacode
• C3.ai, Inc.
• CopyAI, Inc
• Databricks
• Dataroots BV
• Drafter AI
• GitHub, Inc.
• Grammarly Inc.
• Hour One
• International Business Machines Corporation
• Inflection
• Inworld AI
• Lily AI
• Meta
• MOSTLY AI
• SOUNDRAW
• STABILITY AI LTD
• Synthesia Limited

KEY QUESTIONS ANSWERED:

1. Which region dominates the global generative AI market share?

2. How big is the generative AI market?

3. What is the growth rate of the global generative AI market?

4. Who are the key players in the global generative AI market?

5. What are the significant trends in the generative AI industry?