Artificial Intelligence (AI) Software Market Size, Share, and Trends 2024 to 2034

The global artificial intelligence (AI) software market size was evaluated at USD 138.4 billion in 2022 and is predicted to hit around USD 1,094.52 billion by 2032, growing at a CAGR of 22.97% during the forecast period from 2023 to 2032.

Key Takeaways

• By deployment model, the cloud segment is projected to boost the market from 2023-2032.
• By offering, the software segment is likely to hold the largest market revenue share from 2023-2032.
• By application, the voice processing segment holds the largest market revenue share from 2023-2032.
• By end-user, the advertising and media segment contributed to a revenue share of around 21% in 2022. 
• By geography, The North America holds the largest revenue share of more than 43% in 2022.

Artificial Intelligence (AI) Software Market Overview

Artificial intelligence, with its supercomputer vision, has changed the landscape for many industries across the globe. Artificial intelligence software is capable of learning, reasoning, perception, problem-solving, and many other intelligent behaviors. This artificial intelligence software learns various data and works accordingly. Artificial intelligence software has features of a virtual assistant, machine learning, voice recognition, and speech recognition. Artificial intelligence software acquires h human-like behavior or intelligence, which enables it to perform tasks as humans do. 

Artificial intelligence software is a perfect combination of mathematical functions and complex algorithms. Artificial intelligence software is used in cars, smartphones, social media feeds, banking, video games, and many other applications of our day-to-day lives. Artificial intelligence software provides machines with advanced capabilities to find perfect solutions. 

Considering the advancement in technology all over the globe, many businesses in multiple sectors have adopted artificial intelligence software to enhance their performance and to get better insights into the business. Due to the rising demand for artificial intelligence software, the AI software market is likely to grow in the forecast period of 2023-2032.

Artificial intelligence software is integrated into various sectors such as banking, IT & telecommunication, automotive, healthcare, and many others. With its capacity to detect threats, artificial intelligence software is primarily used in banking, retail, and IT & telecommunication sectors to protect against cyber threats to consumers. During the Covid-19 pandemic, industries such as retail, manufacturing, and transportation investments in the artificial intelligence software market. Artificial intelligence solutions such as Qualcomm, AWS Chatbots, Open AI Codex, and Azure AI have gained demand in the market from corporate companies to improve business operations. The artificial intelligence software market is likely to grow in the upcoming period.

Artificial Intelligence (AI) Software Market Scope

Artificial Intelligence (AI) Software Market Dynamics

Rising demand for improved business IoT solutions, self-driving cars, and robots will likely drive the growth of the artificial intelligence software market. Artificial intelligence software is one of the most efficient ways to reduce human efforts consumption; thus, it is integrated into most fields, from healthcare to defense. Along with this, many prominent companies are launching new artificial intelligence software to sustain themselves in the artificial intelligence software market. For instance, Amazon announced in November 2022 the launch of a new artificial intelligence tool, 'Create with Alexa,' to generate stories for kids. This new artificial intelligence software generates reports with images, music, and animation. 

Considering the factors such as reduced risk, proper data management, improved production efficiency, reduced disruptions in the supply chain, and gained end-to-end visibility of operations that artificial intelligence software provides, the market is expected to show significant growth in the forecasted period of 2023-2032.

The artificial intelligence software market is widespread and carries multiple drivers. The unfolding market for 4IR technologies, such as the Internet of Things, robotics, or quantum computing, will fuel the artificial intelligence software market. Multiple enterprises are investing in artificial intelligence software to plan and implement business strategies and for better customer support. Rapidly increasing adoption of artificial intelligence software is seen as a major driver for the market. During the Covid-19 pandemic, the healthcare sector adopted artificial intelligence technology for better management. 

The artificial intelligence software used in the healthcare sector (hospitals, clinics, and labs) enhanced the overall experience of work. Rising demand for artificial intelligence software from the healthcare sector will likely fuel the market in the upcoming years. Upgrading technology is also providing lucrative opportunities for market growth. By integrating artificial intelligence software into cyber security, businesses see it as a significant safeguard against cyber-attacks to protect their networks and confidential data. The demand for such software in the cyber security branch is another driver for the artificial intelligence software market. Artificial intelligence software is capable of providing an improved customer experience. Many companies are adapting artificial intelligence software to provide better customer service. Collectively, increasing investment in advanced artificial intelligence software is a considerable driver for the artificial intelligence software market. 

Along with these drivers, the artificial intelligence software market carries several restraints. However, artificial intelligence technology is being admired globally, and the limited skill set for implementing proper artificial intelligence software is seen as a major restraint for the artificial intelligence software market. Lack of technical expertise for such complex management hampers the growth of the artificial intelligence software market. The algorithms in artificial intelligence technology depend on the input data, and any unintended mistakes in input data can disrupt the programming of artificial intelligence software. Such incidents are seen as another restraint to the growth of the artificial intelligence software market. 

Covid-19 Impact

The Covid-19 pandemic affected almost every industry across the globe. The complete lockdown due to the rapidly spreading virus forced companies to shut down. However, the Covid-19 pandemic has shown positive impacts on the artificial intelligence software market. The Covid-19 pandemic period gave a boon to the work-from-home culture. During this period, many companies adopted artificial intelligence (AI) software for the complete automation of work. Artificial intelligence software helped firms to monitor the job properly in a remote way. Artificial intelligence software helped companies to resolve issues and work in a more efficient way. Artificial intelligence software chatbots helped many firms to connect with their clients remotely. Companies are likely to invest in artificial intelligence software even after the Covid-19 pandemic owing to the rising importance of artificial intelligence software for better revenue generation and enhanced customer interactions,

Schools/colleges/institutions were shut down to tackle the spread of the coronavirus. During this period, adopting artificial intelligence software helped schools, colleges & institutions as managing whole data insights about students became hassle-free. The healthcare sector, which experienced a peak during this period, was introduced to artificial intelligence software to ease the workload and manage patients' records. Artificial intelligence software offered better analytics to the hospital administration, which helped in better diagnosis during this critical phase. The artificial intelligence software market has shown overall progress during the Covid-19 pandemic.

Deployment Model Insights

By deployment model, the artificial intelligence software market is segmented into On-premises and Cloud models. Cloud-based artificial intelligence software has multiple perks, including high scalability and reduced operation costs. Cloud deployment for machine learning in artificial intelligence software is projected to boost the market in the forecast period of 2023-2032

Multiple vendors such as Amazon, Google & IBM use the cloud for real-time analytics to ease the work. With the increasing need for cloud-based tools, the cloud segment will likely show significant growth in the forecasted period. Another benefit of cloud deployment is it allows access remotely. In contrast, the in-premise deployment allows extensive storage options. 

Offering Insights

By offering the artificial intelligence software market is segmented into Hardware, Software & Services. The software is likely to hold the largest market revenue share due to its ability to extract data and provide real-time analytics. It also supports the decision-making process. Google Cloud Machine Language is a prominent example that offers software-type solutions. However, the hardware in the artificial intelligence software market shows significant growth due to its capacity to enhance the efficiency of the process. 

Application Insights

By application, the artificial intelligence software market is segmented into Voice processing, Text processing & Image Processing. Among all these applications, the voice processing application has gained recognition with its intelligent assistant. The voice processing artificial intelligence software uses natural language processing. The voice processing application can handle hands-free requests that allow customers to get real-time service from the company. Thus, this type of application enables companies to provide improved customer service. Google Now, Siri and Alexa are a few examples of voice-processing artificial intelligence software in the market. In contrast, text processing is used in the automation of analyzing electronic texts. This processing is used in language-related tasks. Artificial intelligence software uses image processing to analyze images to identify data. 

Artificial Intelligence (AI) Software Market Share, By End-User, 2022 (%)

End-User Insights

By end-users, the artificial intelligence software market is segmented into Healthcare, BFSI, Law, Retail, Advertising and Media, Automotive & Transportation, Agriculture, Manufacturing, and Others. The advertising and media segment accounted for a revenue share of around 21% in 2022. After the Covid-19 pandemic, the healthcare sector has shown predictable growth in the artificial intelligence software market with the rapidly increasing adaptation of artificial intelligence software. In upcoming years, the BFSI and retail sectors are seen as major vital players in the artificial intelligence software market. The increasing demand for artificial intelligence software to fight against cyber-attack and fraudulent activities and to provide improved customer service are a few reasons to drive the market in these sectors.

Furthermore, artificial intelligence software is rapidly being used in the automotive industry for self-driven car design, manufacturing, and AI-based solutions and production. 

Regional Insights

By region, the artificial intelligence software market is segmented into North America, Europe, Asia Pacific, Latin America, Middle East & Africa. Geographically, North America holds the largest revenue share of more than 43% in 2022 due to rising investments. The North American region's manufacturing, retail, and healthcare industries have shown significant growth in the artificial intelligence software market during the post-Covid-19 pandemic. The implementation of 5G technology is projected to boost the artificial intelligence software market in the Asia Pacific region. The presence of major key players in China, such as Huawei, Baidu, Inc. & Alibaba Cloud, push the artificial intelligence software market towards growth. 

The market in the Middle East region is expected to grow in upcoming years with the government's noticeable initiatives. The Saudi Arabian government has developed Saudi Data and AI Authority (SDAIA), which aims to position Saudi Arabia in the top 10 countries in artificial intelligence.

Recent Developments

• In December 2022, a South Korea-based firm, VUNO, announced that the company had gained approval from Taiwan's Food & Drug Administration to market its artificial intelligence (AI) fundus analysis software. This artificial intelligence software will quickly detect the presence of lesions indicative of retinal diseases.
• In November 2022, a technology software company, UrbanTide, announced a new artificial intelligence (AI) software that will identify households with poor energy efficiency. This advanced artificial intelligence software will help people save on their energy bills. The information collected by this software can be used by authorities, associations, or service care providers to form practical solutions.
• In October 2022, IBM announced the expansion of its embeddable artificial intelligence software portfolio. This expanded portfolio provides access to artificial intelligence libraries that power popular IBM Watson products. These new 3 AI libraries include industry-leading products for a better end-user experience.
• In October 2022, Facebook Parent Meta launched a new set of free artificial intelligence software for its applications. These launched artificial intelligence software tools will boost the performance of underlying chips. 
• In August 2022, a pharma company Medtronic India launched GI Genius, an artificial intelligence-driven module. GI Genius uses artificial intelligence software to fight against colorectal cancer. This technologically advanced AI software helps highlight polyps of various shapes and sizes, which further helps treat colorectal cancer.

Artificial Intelligence (AI) Software Market Companies

The artificial intelligence software market is spread globally with multiple key players involved. A few major players in the market are- Advanced Micro Devices, Baidu, Inc., Atomwise, Inc., International Business Machines Corporation, Oracle, Cisco, Google LLC, Intel Corporation, Microsoft, Lifegraph, and Cyrcadia Health.

Segments Covered in the Report

By Deployment Model

• On-premises
• Cloud

By Offering

• Hardware
• Software
• Services

By Application

• Voice Processing
• Text Processing
• Image Processing

By End-User

• Law
• Retail
• Healthcare
• BFSI
• Advertising and Media
• Automotive & Transportation
• Agriculture
• Manufacturing
• Others

By Geography

• North America
• Europe
• Asia-Pacific
• Latin America
• Middle East & Africa (MEA)