AI in Education Market Size, Share and Trends 2024 to 2034

AI in Education Market Size and Forecast 2024 to 2034

The global AI in education market size is projected to reach around USD 112.30 billion by 2034 from USD 5.18 billion in 2024, at a CAGR of 36.02% between 2024 and 2034. The North America AI in education market size reached USD 1.45 billion in 2023. The increasing adoption of artificial intelligence technology and government spending on education globally is driving demand for the AI in education market.

AI in Education Market Key Takeaways

• North America dominated the AI in education market with the largest market share of 38% in 2023.
• Asia Pacific is expected to host the fastest-growing market during the forecast period.
• By component, the solutions segment has generated more than 72% of market share in 2023.
• By component, the services segment is expected to grow at a double digit CAGR of 37.15% during the forecast period.
• By deployment, the cloud segment contributed the biggest market share of 57% in 2023.
• By deployment, the on-premise segment is expected to grow at the fastest rate in the market during the forecast period.
• By technology, the machine learning segment accounted for the largest market share of 64% in 2023.
• By technology, the natural language processing (NLP) segment is set to grow at a remarkable CAGR 36.64% during the forecast period.
• By application, the learning platform & virtual facilitators segment has contributed more than 47% of market share in 2023.
• By application, the smart content segment is expected to expand at a solid CAGR of 37.84% during the forecast period.
• By end use, the higher education segment made up the largest share of the market in 2023.

U.S. AI in Education Market Size and Growth 2024 to 2034

The U.S. AI in education market size was exhibited at USD 1.09 billion in 2023 and is projected to be worth around USD 32.64 billion by 2034, poised to grow at a CAGR of 36.21% from 2024 to 2034.

North America dominated the AI in education market in 2023. Substantial investment from Silicon Valley giants such as Google, Microsoft, Apple, and IBM in education has contributed to the market’s success in the region. The robust information technology infrastructure in the region has led to the widespread adoption of AI technology in education. The United States government's investment in education has also spurred growth in the market.

• In 2022, the U.S. Department of Education Office of Educational Technology announced a national education technology policy to use technology to revolutionize teaching and learning. Congress also allocated $2.75 billion for the Digital Equity Act to work towards including all individuals and communities in the digital economy by setting up high-speed internet across the country.

Asia Pacific is expected to host the fastest-growing AI in education market during the forecast period. The advent of large AI-based learning startups in the region, such as the South Korean Rid and Knowre, the Chinese Squirrel AI, and Unacademy in India, is spurring growth in the region.

• According to Indian educational startup Unacademy, their offline centers grew from tutoring 6,000 learners in 2022 to 32,000 learners in 2023. The company also managed to reduce its cash burn by 60% during the last eight years.

Market Overview

Artificial intelligence in education is the process of integrating AI technologies to improve the quality and effectiveness of education and create better learning outcomes. AI in education assists in personalizing learning experiences, improving teaching practices, and supporting educators through tools and insights to create quality education environments. High global smartphone penetration has also contributed to AI in education, helping address the global gaps in education by enabling educators to reach remote areas.

Developments in artificial intelligence increased public and private spending in education, and the growth of edutainment is driving growth in the AI in education market. The COVID-19 pandemic provided a huge boost to the market as educational institutions and schools globally had to switch to remote teaching models.

Also, slow digitizations in emerging economies, coupled with the lack of a robust IT infrastructure, have been challenges to growth in the AI in education market. AI-based education is heavily dependent on existing IT infrastructure, data, and the Internet of Things to function. While smartphone penetration is high, the lack of proper cloud infrastructure and support services restricts growth in the sector.

• According to the UNESCO Education Finance Watch report, government spending on education in low-income countries as a percentage of GDP rose from 3.2 percent in 2018 to 3.6 percent in 2021 during the pandemic.

AI in Education Market Growth Factors

• The integration of AI technologies into education have led to better learning outcomes through customized lessons, the introduction of chatbots and data driven decision making. These developments have boosted growth in the market.
• The increasing use of AI-powered tools by educators in high-incomes nations has led to demand in the AI in education market.
• Adoption of AI in education has led to lower educator administrative workloads and improved classroom interactions and engagement.

Market Scope

Market Dynamics

Drivers

AI-based educational technology is leading to better learning outcomes

AI-based are used to analyze student data and tailor educational instructions to an individual learner’s pace based on their strengths, weaknesses, and interests. AI systems and big data analytics allow educators to receive real-time information on student progress and areas of improvement.

• In October 2023, a Forbes Advisor survey conducted in the United States found that 55% of educators found that AI improved educational outcomes. Of the 500 educators surveyed in the country, 60% used AI tools in their classrooms.

AI-powered tools providing support for educators

In the AI in education market, natural language processing technologies are powering chatbots to provide students with 24/7 access to doubt support and course material. Chatbots also assist educators by mitigating availability issues. In tertiary education, educators use AI to automate grading tests, test for plagiarism, and reduce administrative workload, leaving more time to engage with students.

• In March 2024, Indian software company Pinak Ai launched an AI-powered conversational chatbot for students preparing for the country’s Civil Services Examination. The chatbot was launched as an app on Android and iOS and is intended to fetch real-time information on various topics and current affairs.

Restraint

Lack of adequate IT infrastructure and slow digitization

Information iechnology infrastructure, crucial for AI in education, is still lacking in many emerging economies. Despite smartphone penetration remaining high and the cost of internet data plans falling, low quality of internet connectivity and a lack of compatible devices, especially in underdeveloped regions, restrict the growth of AI in education. The lack of skilled professionals in the region further challenges growth in the AI in education market.

Further investment is necessary in the digital infrastructure landscape in regions like Africa and Asia Pacific. According to the Pew Research Center, while computer usage has increased significantly in many countries, particularly in Europe, it is growing relatively slowly, if at all, in parts of Asia, Africa, and Latin America.

Opportunity

Data-driven decision-making with AI

As the AI in education market continues to grow, opportunities for large-scale data collection over the years will enable AI-based decision-making. Utilizing generative AI to analyze the student data captured by government and private educational institutions will help them make informed decisions about their curriculum. AI-powered tools will also be able to streamline recruitment, resource allocation, and day-to-day administration.

Component Insights

The solutions segment dominated the global AI in education market in 2023. Rising disposable incomes and established IT companies, especially in large emerging economies such as India and China, have led to substantial growth in smartphone penetration in the Asia-Pacific. The large-scale expansion of digital payment options such as the Unified Payments Interface or UPI in India has also led to the growth of subscription-based educational websites and edutainment apps.

• According to the National Payments Corporation of India, the UPI transaction volume stood at 12,924.97 million transactions in June 2024 alone.

The services segment is expected to grow at the fastest rate in the AI in education market during the forecast period between 2024 and 2033. Since the COVID-19 pandemic, an interest in online education has risen steadily, with increasing investment by government and private organizations in the education sector. Several education startups providing services, such as education personalization and task automation, have sprung up in emerging economies. Companies are also increasingly providing intelligent content systems that assist in visualization and simulation solutions for better information perception, which have also entered the market.

Deployment Insights

The cloud segment dominated the AI in education market in 2023. Rising costs in the sector are pushing educational institutions to outsource data management and storage. Cloud computing uses hosted services such as data storage, networking, servers, and software maintained by a cloud service provider.

The on-premise segment is expected to grow at the fastest rate in the AI in education market during the forecast period between 2024 and 2033. Educators are increasingly switching to on-site data storage solutions to address data privacy concerns and security risks such as cyber-attacks and data breaches.

• According to data analyzed by India Today’s Open-Source Intelligence team, at least 65 major examinations across 19 Indian states have been subject to question paper leaks since 2019.

Technology Insights

The machine learning segment made up the largest share of the AI in education market in 2023. Machine learning solutions are contributing to conversational AI chatbots. These systems allow students around-the-clock access to assistance with doubts, virtual mini-lessons, and assistance with homework.

The natural language processing (NLP) segment is set to grow at the fastest rate in the AI in education market in the forecast period. The segment is integrated with several educational contexts, such as science, linguistics, online education, and research. Natural language processing solutions provide solutions to assist in writing, analysis, and assessment procedures, such as grammar checkers. Grammar checkers are websites or apps that check for the grammatical correctness of a text through natural language processing and grammatical rules to identify mistakes and syntax errors.

Application Insights

The learning platform & virtual facilitators segment led the global AI in education market in 2023. The growth of digital education technology adoption across the world, with investments from governments, is providing a boost to this sector. In India, individual state governments are teaming up with e-learning platforms to provide AI-based solutions for their educational institutions.

The Indian government has announced a New Education Policy in 2020 focusing on maximizing online education opportunities. The Indian Department of Education allocated IND₹ 73,498 crore, the highest ever, in the budget for 2024-25.

The smart content segment is expected to expand at the fastest rate in the AI in education market in the forecast period between 2024 and 2033. Smart content refers to digital educational materials such as animations, interactive videos, 3D models, and multimedia presentations. These work to create a more immersive learning experience for students. Natural language processing and computer vision are used to increase the interactivity of lessons.

End-use Insights

The higher education segment made up the largest share of the AI in education market in 2023. The rising academic standards, large-scale standardized testing, and shift away from rote learning in emerging economies have driven demand for this sector. Educators are encouraged to focus more on the development of critical thinking and problem-solving abilities in preparation for higher studies and careers. Corporate training programs are also picking up steam with increasing demand for employee skill enhancement to stay competitive in the rapidly changing technological landscape.

AI in Education Market Companies

• Aleks
• Riid
• DreamBox Learning
• Kidaptive
• Osmo
• Memrise
• Amazon Web Services, Inc.
• IBM Corporation
• Microsoft Corporation
• Cognizant
• Google LLC
• Pearson Plc
• BridgeU

Segments Covered in the Report

By Component

• Solutions
• Services

By Deployment

• Cloud
• On-premise

By Technology

• Natural Language Processing (NLP)
• Machine Learning

By Application

• Learning Platform & Virtual Facilitators
• Intelligent Tutoring System (ITS)
• Smart Content
• Fraud And Risk Management
• Others

By End-use

• K-12 Education
• Higher Education
• Corporate Training & Learning

By Geography

• North America
• Asia Pacific
• Europe
• Latin America
• Middle East & Africa