IDC: Rapid innovations in AI to drive $156B in sales by ’28

The demand for AI platform software is expected to grow 40% a year 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 focused on the rapid pace by which AI platforms, such as Microsoft Azure AI, Amazon AI services, Google Cloud AI, and OpenAI grew last year, and how that growth is projected to maintain a “remarkable momentum,” driven by the increasing adoption of technology across many industries.

IDC expects that level of growth to push revenue for AI software to $307 billion worldwide in 2027. That forecast includes platforms and AI applications, AI System Infrastructure Software (SIS), and AI Application Development and Deployment (AD&D) software.

In 2023, the global AI platforms market grew by 44.4% year-on-year compared to 2022. Microsoft led the market, increasing by 77.9% last year to capture 13.8% of the market. Palantir, a major AI player, had 7.5% of the market, representing an 18.2% year-over-year increase, according to IDC.

“OpenAI’s meteoric rise in 2023 marked nothing short of an enormous transformation in the AI landscape,” IDC said in its report: “Worldwide Artificial Intelligence Platforms Software Market Shares.” OpenAI had a staggering 690% year-over-year increase in revenue last year; the company’s market share soared to 5.8%, “a remarkable achievement for a relative newcomer in this highly competitive field,” IDC said.

 Ritu Jyoti, IDC’s group vice president of IDC’s AI, Automation and Analytics research, said the current market shows “no signs of slowing down. Rapid innovations in generative AI is changing how companies think about their products, how they develop and deploy AI applications, and how they leverage technology themselves for reinventing their business models and competitive positioning.”

AI platform adoption will continue to accelerate with the emergence of unified platforms for predictive and generative AI that support interoperating APIs, ecosystem extensibility, and responsible AI adoption at scale, according to Jyoti.

IDC expects cloud-based deployments of AI software to grow at a faster rate than on-premises deployments, with revenue from AI platforms in the public cloud forecast to have a five-year CAGR of 50.9%.

“This trend is attributed to the advanced security measures, data and regulatory compliance, and the scalability capabilities that cloud vendors offer,” IDC said. “With the rapid advancement of technology and the growing demand for AI solutions from businesses across industries, cloud-based deployment of AI platforms software is expected to continue expanding at a rapid rate.”