AI Market Will Surge to Near $1 Trillion by 2027, Bain Says

Demand for upstream chip components such as integrated circuit design and related IP could rise 30 percent or more by 2026, Bain said.

By Saritha Rai, Bloomberg | Updated: 25 September 2024 16:33 IST

AI Market Will Surge to Near $1 Trillion by 2027, Bain Says

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Establishing successful sovereign AI ecosystems will be time-consuming and expensive, Bain said

Highlights

Market for AI related services, hardware was worth $185 billion last year
Small language models are lightweight and efficient
Multiple governments are spending to subsidise sovereign AI

The global market for AI-related products is ballooning and will hit as much as $990 billion (roughly Rs. 82,75,424 crore) in 2027, as the technology's quick adoption disrupts companies and economies, Bain & Co. said.

The market, including Artificial Intelligence (AI)-related services and hardware, will grow 40 percent to 55 percent annually from $185 billion (roughly Rs. 15,46,356 crore) last year, the consulting firm said in its fifth annual Global Technology Report released Wednesday. That will lead to revenue of $780 billion (roughly Rs. 65,19,774 crore) to $990 billion (roughly Rs. 82,75,424 crore), Bain said.

The growth will be fueled by bigger AI systems and larger data centers to train and run them, driven by companies and governments using the technology to boost efficiency. Demand is rising so fast that it'll strain supply chains for components, including chips needed to run the services, Bain said. Combined with geopolitical tensions, rising sales could trigger shortages in semiconductors, personal computers and smartphones, Bain warned.

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Demand for upstream chip components such as integrated circuit design and related IP could rise 30 percent or more by 2026, putting pressure on manufacturers, Bain said. The cost of larger data centers could jump from $1 billion (roughly Rs. 8,358 crore) to $4 billion (roughly Rs. 33,436 crore) now to between $10 billion (roughly Rs. 83,590 crore) and $25 billion (roughly Rs. 2,08,977 crore) in five years, as their capacity expands to more than a gigawatt from 50–200 megawatts currently, it said.

“These changes are expected to have huge implications on the ecosystems that support data centers including infrastructure engineering, power production, and cooling,” the consultancy said in a statement.

Companies are moving beyond an experimentation phase and beginning to scale generative AI across their operations, Bain said. Small language models, similar to the large language models that led to the creation of OpenAI's ChatGPT chatbot, but lightweight and efficient, could be favored by enterprises and countries amid concerns surrounding costs and data privacy.

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Governments including Canada, France, India, Japan and the United Arab Emirates are spending billions of dollars to subsidise sovereign AI, investing in domestic computing infrastructure and AI models created within their borders and trained on native data. But establishing successful sovereign AI ecosystems will be time-consuming and expensive, according to Anne Hoecker, head of Bain's Global Technology practice.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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