Artificial Intelligence: The New Impulse For Alphabet

The active investments of Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) in the artificial intelligence market, the growth rate of which over the next decade will be four times higher than that of the digital advertising market, increase the long-term investment attractiveness of the company. To begin, let's take a look at the current growth forecasts for the global Artificial Intelligence (AI) market in the coming decade. For a better clarity, I've slightly modified these data and projected the trend until the year 2030. Here is what I've got: over the next 15 years, this market will be growing at the CAGR of 40%, and in the next 10 years, it will be increasing by an average of 50% each year: Tractica forecast (a market intelligence firm that focuses on human interaction with technology) is a bit more modest, but it still suggests that the annual worldwide AI revenue will grow from $643.7 million in 2016 to $36.8 billion by 2025, demonstrating a CAGR of 49.88%: So, the growth in the next decade at an average annual rate of 50% - is really a lot? It depends on what to compare with, but given that I'm performing this analysis through the prism of perspectives for Alphabet, it probably makes sense to compare AI with digital advertising market, which is accountable for 87% of Google's revenue.