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AI Tech Market to Hit $342 Billion in 2021

AI
(Image credit: Andrzej Wojcicki/Getty Images)

NEEDHAM, Mass.—The global market for artificial intelligence (AI) software, hardware, and services is estimated to grow 15.2% in 2021 to $341.8 billion, according to the latest release of the International Data Corporation (IDC) Worldwide Semiannual Artificial Intelligence Tracker.

IDC is also predicting massive 18.8% growth in 2022, with the sector on track to break the $500 billion mark by 2024. 

Software is by far the largest of the AI tech categories, accounting for 88% of the market. 

Within the AI Software category, AI Applications has the lion's share at nearly 50% of revenues, IDC reported. 

In terms of growth, however, AI Platforms has the strongest with a five-year compound annual growth rate (CAGR) of 33.2%. 

The slowest will be AI System Infrastructure Software with a five-year CAGR of 14.4% while accounting for roughly 35% of all AI Software revenues. 

"Disruption is unsettling, but it can also serve as a catalyst for innovation and transformation,” said Ritu Jyoti, group vice president for AI and Automation Research at IDC. “2020 was the year that accelerated digital transformation and strengthened the value of enterprise AI. We have now entered the domain of AI-augmented work and decision across all the functional areas of a business. Responsible creation and use of AI solutions that can sense, predict, respond, and adapt at speed is an important business imperative."

The AI Services market was estimated at $19.4 billion in 2020, representing the fastest growth relative to hardware and software. For 2021, it is forecast to grow at 19.3%. Over the next five years, it is expected to enjoy the best CAGR at 21%. Overall, AI Services is expected to be a $50 billion market by 2025, the research company said. 

"AI has emerged as an essential component of the future enterprise, fueling demand for services partners to help organizations clear the many hurdles standing between pilot projects and enterprise AI," said Jennifer Hamel, research manager, Analytics and Intelligent Automation Services at IDC. "Client demand for expertise in developing production-grade AI solutions and establishing the right organization, platform, governance, business process, and talent strategies to ensure sustainable AI adoption at scale drives expansion across both IT services and business services segments."

AI Hardware is the smallest category with 5% share of the overall AI market. Nonetheless, it is forecast to grow the fastest in 2021 at 29.6% year over year. It is also expected to hold the best growth spot in 2022. Over the next five years, its CAGR is estimated at 19.4%. 

"The market for AI servers and storage was less impacted than anticipated by the COVID-19 pandemic and is now rapidly picking up steam again, especially at the edge," said Peter Rutten, research director, Infrastructure Systems, Platforms and Technologies at IDC. "The infrastructure of choice is coalescing around massively parallel compute using co-processors and server clusters with fast interconnects and networks."

The IDC Worldwide Semiannual Artificial Intelligence Tracker publishes AI vendor share and market forecast data on a semi-annual basis. For more information about IDC's Worldwide Semiannual Artificial Intelligence Tracker, visit www.idc.com.  

George Winslow

George Winslow is the senior content producer for TV Tech. He has written about the television, media and technology industries for nearly 30 years for such publications as Broadcasting & Cable, Multichannel News and TV Tech. Over the years, he has edited a number of magazines, including Multichannel News International and World Screen, and moderated panels at such major industry events as NAB and MIP TV. He has published two books and dozens of encyclopedia articles on such subjects as the media, New York City history and economics.