Demand for AI platform software is expected to grow 40% annually over the next four years, rising from $27.9 billion in sales last year to $153 billion in 2028, according to a new report from research firm IDC.
The report highlights that AI platforms such as Microsoft Azure AI, Amazon AI Services, Google Cloud AI and OpenAI have grown rapidly over the last year, and that growth is predicted to maintain its “impressive momentum” as adoption of the technology increases across many industries.
IDC predicts that this level of growth will drive AI software revenue to $307 billion worldwide in 2027. This projection includes platforms and AI applications, AI systems infrastructure software (SIS), and AI application development and deployment (AD&D) software.
In 2023, the global AI platform market grew 44.4% year-on-year compared to 2022. The market was led by Microsoft, which increased 77.9% last year and captured 13.8% of the market. According to IDC, leading AI company Palantir accounts for 7.5% of the market, showing an increase of 18.2% year-on-year.
“OpenAI's rapid growth in 2023 is truly a game changer for the AI industry,” IDC said in its report, “Worldwide Artificial Intelligence Platform Software Market Share.” OpenAI achieved a staggering 690% year-over-year revenue increase last year, and the company's market share soared to 5.8%, “a remarkable achievement for a relative newcomer in this highly competitive space,” IDC said.
Ritu Jyoti, vice president of IDC's AI, Automation and Analytics Research Group, said the current market “shows no signs of slowing down. Rapid innovation in generative AI is changing the way companies think about their products, how they develop and deploy AI applications, and how they leverage the technology to reinvent their business models and competitive positioning.”
According to Jyoti, the adoption of AI platforms will continue to accelerate due to the emergence of interoperable APIs, ecosystem scalability, and integrated predictive and generative AI platforms that support responsible AI adoption at scale.
IDC predicts that cloud-based AI software adoption will grow faster than on-premise deployments, with revenue from public cloud AI platforms growing at a five-year CAGR of 50.9%.
“This trend is driven by the advanced security measures, data and regulatory compliance, and scalability features offered by cloud vendors,” IDC said. “Due to rapid advancements in technology and growing demand for AI solutions from enterprises across industries, cloud-based deployments of AI platform software are expected to continue to expand rapidly.”
