Compared to a few years ago, the artificial intelligence (AI) market is starting to solidify around real-world applications with the pace of change being faster than it ever has been before, as startups and technology providers rush to create platforms and targeted niche solutions for solving specific enterprise problems. According to a new report from Tractica, the rising tide of AI adoption across multiple industries will drive significant growth during the next decade, and the market intelligence firm forecasts that annual worldwide AI software revenue will increase from $3.2 billion in 2016 in 2016 to $89.8 billion by 2025. This forecast is a significant upgrade of Tractica's previous projection for AI market revenue, which was published in 2Q17, due to an improved outlook for a number of specific use cases across multiple industries. "Artificial intelligence is already key to how consumer internet companies operate today, allowing them to roll out hyper-personalized services by following an'AI first' strategy," says research director Aditya Kaul. "The rest of the market in the enterprise and government sectors is still catching up on adopting AI and has yet to fully understand its value, including the breadth and depth of use cases, the technology choices surrounding AI, and the implementation strategies."
Artificial intelligence (AI) within the consumer, enterprise, government, and defense sectors is migrating from a conceptual "nice to have" to an essential technology driving improvements in quality, efficiency, and speed. According to a new report from Tractica, the top industry sectors where AI is likely to bring major transformation remain those in which there is a clear business case for incorporating AI, rather than pie-in-the-sky use cases that may not generate return on investment for many years. "The global AI market is entering a new phase in 2020 where the narrative is shifting from asking whether AI is viable to declaring that AI is now a requirement for most enterprises that are trying to compete on a global level," says principal analyst Keith Kirkpatrick. According to the market intelligence company, AI is likely to thrive in consumer (Internet services), automotive, financial services, telecommunications, and retail industries. Not surprisingly, the consumer sector has demonstrated its ability to capture AI, thanks to the combination of three key factors – large data sets, high-performance hardware and state of the art algorithms.
Deep learning is a buzzword that has been hyped by the business and technical press for years, often with relatively meager results that failed to live up to expectations. But over the past 18 months, according to a new report from Tractica, the true power of deep learning has been realized, thanks to advances in hardware and algorithms that use pattern recognition applied in a continuous learning loop, enabling them to train themselves to perform tasks without requiring explicit programming code. The sheer power of deep learning, however, is likely to lead to the development of more powerful and disruptive applications of tomorrow, such as driverless cars, personalized education, and preventative healthcare. Tractica forecasts that, with this expanding set of applications, the worldwide deep learning software market will grow from $3 billion in 2017 to $67.2 billion by 2025. "Deep learning has been a key point of focus for many companies, given its potential to transform entire industries," says principal analyst Keith Kirkpatrick.
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.