Generative AI Market

The global Generative AI Market is valued at USD 11.5 Billion in 2023 and is projected to reach a value of USD 140.02 Billion by 2032 at a CAGR (Compound Annual Growth Rate) of 32.01% between 2024 and 2032.

Key highlights of Generative AI Market

• North America dominated the market in 2023, obtaining the largest revenue share of 39.8%
• The Asia Pacific will witness remarkable growth during the forecast period
• In 2023, the Software segment dominated the Generative AI market with 65.1% market share
• The Operations Business Function segment continued to assert its dominance by application, capturing the largest market share in 2023
• Media & Entertainment dominated the market with a significant market share of 23.2% in 2023
• The focus on ethical considerations and responsible AI development, along with the democratization of generative AI technologies through user-friendly tools and platforms, is driving wider adoption and acceptance

Generative AI Market: Regional Overview

North America Dominated Sales with a 39.8% share in 2023. The surge in demand for AI-generated content across media & Entertainment, and healthcare sectors and the availability of extensive datasets for training generative models fuel the Generative AI market. Notably, the efficacy demonstrated by language models like GPT-3 in tasks such as translation and text completion underscore their escalating adoption across industries. This trend is poised to persist, supported by the increasing adoption of pseudo-imagination applications in medical care, the escalating occurrences of banking frauds, and the proactive initiatives of major players like Meta, Google LLC, and Microsoft driving the evolution of the generative AI landscape.

U.S. Generative AI Market Overview

The US Generative AI market, valued at USD 2.92 Billion in 2023 to USD 34.85 Billion in 2032, is anticipated to grow at a CAGR of 31.7% from 2024 to 2032. The United States is poised to lead the Generative AI markets rapid expansion driven by the widespread adoption of deep learning and machine learning technologies across diverse industries, including healthcare, gaming, design, advertising, and Entertainment, notably small and medium enterprises (SMEs). The growth is fueled by intensive research and development efforts in the AI sector and the presence of thriving AI companies dedicated to developing generative AI products.

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The global Generative AI market can be categorized as Offering, Application, Vertical, and Region.

Generative AI Market: Offering Overview

In 2023, the Software segment dominated the market, accounting for 65.1%

This technology is anticipated to profoundly impact diverse sectors such as fashion, Entertainment, and transportation, owing to its enhanced capabilities facilitated by robust machine learning models. Companies like H&M and Adidas have leveraged generative AI to craft clothing designs and personalized sneakers. At the same time, it has also streamlined fabric and print pattern generation processes for designers, resulting in efficiency gains. Generative AI uses foundation, deep learning models that can perform several complicated tasks concurrently to produce new information rather than just categorizing and recognizing existing data. Given that it is growing more potent due to strong ML models, generative AI software is anticipated to play a vital role in various businesses and sectors, such as fashion, Entertainment, and infrastructure. For instance, when a group of fashion designers from the Laboratory for Artificial Intelligence in Design (AiDLab) in Hong Kong staged a fashion exhibition showcasing creations aided by generative AI in December 2022.

Generative AI Market: Application Overview

In 2023, the operations business function generated significant revenue. The Application segment is divided into Business Functions: Marketing & Sales, Human Resources, Operations, Finance, Research & Development (R&D), Others, and Data modalities: Text, Code, Image, Video, Audio, & Speech. Organizations can optimize processes, elevate decision-making, and automate tasks using generative AI, resulting in heightened productivity and cost-efficiency. The operations segment spans various domains, including supply chain management, logistics, resource allocation, and risk assessment, wherein the capabilities of generative AI yield transformative advantages. As enterprises prioritize operational excellence to maintain competitiveness, the surge in demand for tailored generative AI solutions and sophisticated LLMs addressing specific operational hurdles is poised to sustain the dominance of the operations segment in the LLM market and the broader Generative AI market.

Generative AI Market: Vertical Overview

The Media & Entertainment segment had a significant market share of 23.2% in 2023. The Applications segment is bifurcated into Media & Entertainment, BFSI, Healthcare & Life Sciences, Manufacturing, Retail & eCommerce, Transportation & Logistics, Construction & Real Estate, Energy & Utilities, Government & Defense, IT & ITeS, Telecom, and Others. The growing utilization of generative AI to develop more effective advertisement campaigns is anticipated to fuel the demand for this technology within the media & entertainment sector. Notably, in January 2023, BuzzFeed, Inc., a prominent U.S.-based internet media and entertainment company, unveiled its intention to leverage AI tools from Open AI to enhance and personalize specific content offerings. Additionally, generative AI is increasingly employed in the logistics market for tasks such as route optimization, risk management, communication, and collaboration to enhance overall efficiency, cost reduction, and adaptability in supply chain processes.

Key Trends

• In order to generate immersive and engaging experiences, generative AI approaches are increasingly being combined with virtual reality (VR) and augmented reality (AR). In AR/VR applications, generative AI algorithms are capable of generating realistic virtual environments, objects, and characters. By improving the realism and engagement of AR/VR experiences, this integration opens up new avenues for training, education, entertainment, and other areas.
• In recent years, there have been big improvements in deep learning techniques like variational autoencoders (VAEs) and generative adversarial networks (GANs). These methods can make super realistic content like text, music, and images by learning from lots of data. As research keeps moving forward, generative AI is expected to get even better and be used in more industries.
• Traditionally, making generative AI models needed special skills in machine learning and lots of computer power. But now, theres a move to make these technologies easier to use for everyone by creating simple platforms and tools. This means even people or groups without a ton of technical knowledge can make and use generative AI applications.

Premium Insights

The demand for generative AI applications is being driven by the rising application reach of technologies such as super-resolution, text-to-image, text-to-video, and the modernization of workflows across multiple industries. Industries such as media & Entertainment, retail, manufacturing, IT, and telecom are significantly adopting generative AI solutions. For instance, Microsoft Corporation launched Visual ChatGPT in March 2023, enabling users to interact with ChatGPT through graphical user interfaces for tasks like image generation and editing, further fueling market growth. Furthermore, the market demand is boosted by the increasing necessity of creating virtual worlds in the metaverse, deploying large language models (LLM), and developing conversational GenAI capabilities. These elements are significant because generative AI is transforming player experiences, content generation, and game development. Because businesses expedited their digitalization efforts and increased the adoption of AI across multiple industries to solve the problems posed by the pandemic, the pandemic had a beneficial impact on the Generative AI market.

Companies that provide cloud computing are in a good position to profit from software as businesses look to generative AI solutions to increase productivity and automate processes. Furthermore, the significance of generative AI in propelling future market expansion is highlighted by its capacity to handle numerous modalities concurrently and its potential to revolutionize enterprises through automation, innovation, and personalization. For instance, In March 2023, Grammarly, Inc. introduced GrammarlyGo, a product that uses generative AI to let users write, edit, and customize text a prime example of how technology can revolutionize user experiences.

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Market Dynamics

A primary driver for the growth of the Generative AI market is the evolution of AI and deep learning

Deep learning techniques like neural networks, have significantly advanced the capabilities of generative AI models by enabling them to learn complex patterns and generate more realistic and nuanced outputs. With the advancement of AI technology, generative AI models get more complex, which makes them more widely used in a variety of industries for tasks like picture synthesis and content creation.

The rapid expansion of Large Language Models (LLMs) presents a significant opportunity for the Generative AI market

Text generation, translation, and summarization are just a few of the natural language processing tasks that LLMs, like OpenAIs GPT series, have proven to be quite adept at. Large data sets and powerful computing power are used by these models to achieve impressive performance, which opens up new possibilities for generative AI applications in content creation, virtual assistants, and other domains.

The primary challenge facing the Generative AI market is ensuring the quality of output generated by these models

Generative AI has shown promise in generating creative and valuable content, however ensuring generated outputs accuracy, relevance, and coherence stays a significant challenge. problems with language fluency, coherence, and context comprehension can affect how reliable and usable generative AI applications are. continuous R&D is needed to growth the generative AI models' efficacy and robustness as a way to cope with these troubles. furthermore, concerns about the possible misuse or malicious application of generative AI emphasize how crucial ethical issues and accountable deployment approaches are to the creation and application of these technologies.

Competitive Landscape

The competitive landscape of the Generative AI market is characterized by a dynamic interplay among several vital players striving for market dominance. Leading companies in generative AI algorithms and applications are OpenAI and DeepMind. They encourage innovation in this industry by utilizing their vast research resources and technological know-how. These pioneers in the field are always pushing the limits of what generative models can accomplish, opening up new doors in a variety of industries, such as healthcare, finance, and entertainment. Furthermore, key companies like Morphis Technologies, Synthesia and Mostly AI are gaining traction by providing customized solutions catered to particular use cases or industries, which adds to the markets diversity and competitiveness. The potential of generative AI to produce lifelike content, streamline operations, and ease creative activities is driving an increasing demand for the technology. As a result, market players are likely to become more competitive, which will spur additional innovation and market expansion.

The key players in the global Generative AI market include - Microsoft among others.

Recent Market Developments

• In April 2023, Microsoft Corp. and Epic said they are broadening their long-standing strategic partnership to create and incorporate generative AI into healthcare by fusing Epics cutting-edge electronic health record (EHR) software with the capability and scale of Azure OpenAI Service1. The collaboration strengthens the long-standing relationship, making it possible for businesses to run Epic environments on the Microsoft Azure cloud platform.
• In August 2023, IBM and Microsoft will extend their partnership to assist joint clients in accelerating the implementation of generative AI. Additionally, IBM will deliver a new solution that will give clients access to the knowledge and tools they need to innovate their business processes and successfully scale generative AI.
• In 2023, Google and Cognizant announced their agreement with Cognizant to create healthcare solutions based on LLMs created by Google. This program seeks to address several issues facing the healthcare sector through generative Al and open up new growth opportunities for the LLM market.
• In August 2023, The US Open app and USOpen.org will also have digital fan additions that IBM and the US Tennis Association (USTA) disclosed. Among the elements that these improvements include is voiced commentary produced by artificial intelligence (Al).
• In March 2024, Caylent, a reputable AWS Premier Tier Services Partner for data, AI, and cloud modernization, announced today that it has attained the AWS Generative AI Competency in the Consulting Services category. This specialization acknowledges Caylent as an AWS Partner that supports users and the AWS Partner Network (APN) in advancing the infrastructure, tools, and services essential for generative AI implementation.
• In July 2023, it is expanding its cooperation with OpenAI, a leader in artificial intelligence, Shutterstock, Inc., a prominent worldwide creative platform that provides disruptive brands, digital media, and marketing firms with high-quality content and full-service creative workflow solutions. With a fresh six-year contract, Shutterstock will further establish itself as a top supplier of superior training data for OpenAI models, enabling brands, digital media, and marketing firms to take advantage of disruptive potential.