Artificial Intelligence Software Market Predicted to Skyrocket by 2027

**AI Software Market Set for Unprecedented Expansion with $251 Billion Projection by 2027**

The global market for artificial intelligence (AI) software is poised to undergo a remarkable expansion, with projections pointing toward a surge from $64 billion in 2022 to an astounding $251 billion by 2027, growing at a compound annual growth rate (CAGR) of 31.4%. This forecast, provided by the International Data Corporation (IDC), emphasizes the swiftly increasing footprint of AI across various software sectors.

This significant growth encompasses a range of AI-related elements including AI applications, AI system infrastructure software (SIS), AI application development and deployment (AD&D), and artificial intelligence platforms. Nevertheless, these figures exclude generative AI platforms and applications, which are set to generate separate revenues of $55.7 billion in the same timeframe.

At the heart of this surge is the increasing preference among organizations to utilize AI software solutions tailored to specific needs. IDC’s recent survey indicates that about a third of the participants anticipate a trend where companies seek to buy AI software from vendors or employ a combination of in-house and vendor-supplied AI software for distinct use cases.

Raghunandhan Kuppuswamy, IDC’s research manager for Artificial Intelligence and Automation Research, points out, “The undiminished vigor for investments in AI and automation technologies holds steady, undaunted by economic instability or market shifts. Organizations recognize that leveraging advanced technology is not a mere luxury but an imperative for sustained achievement. Despite the hurdles, companies are steadfast in their belief that AI adoption is integral to future-proof their operations and maintain a competitive edge.”

Currently, AI applications claim the largest share of the market’s revenue, representing about a third in 2023. This segment includes applications in CRM, content management, and enterprise resource management (ERM), among others. Despite being at the forefront, the growth in AI Applications is forecasted to lag behind the overall market with a 21.1% five-year CAGR.

Artificial intelligence platforms are not far behind, currently standing as the second largest category by 2023 revenue. These platforms, essential for creating AI models and applications, showcases an impressive five-year CAGR of 35.8%, indicating their future revenue dominance in the AI software market.

The smaller categories, AI SIS and AI AD&D, though currently contributing less in terms of revenue, are expected to experience rapid growth surpassing the general market with CAGRs of 32.6% and 38.7% respectively. The seamless integration with existing software systems positions the AI SIS category as a critical component for organizations to harness insightful data for making well-informed decisions and enhancing operations.

Ritu Jyoti, group vice president at IDC, highlights an evolving AI landscape. “The merge of traditional AI with Generative AI heralds a new era of innovation, blending decision-making competency with creative capacity,” she stated. As companies continue to channel funds into AI, they will need to address potential challenges and uphold ethical standards to optimize the long-term return on investment (ROI).

In AI, two types of software play distinct roles: AI-centric, where AI is essential to functionality, and AI non-centric, where AI enhances capabilities without being fundamental to application operation.

IDC’s report, “Worldwide Artificial Intelligence Software Forecast, 2023–2027,” casts a detailed prediction of the AI software market, dissecting it into AI-centric, AI non-centric software categories, and technology segments. The AI Applications category delves into further subdivisions like content management, CRM, ERM, and other AI applications. The report also sheds light on the anticipated revenue across different geographic regions and deployment types.

IDC, a pillar in providing global market intelligence and advisory services, sustains its reputation with over 1,300 analysts worldwide and operations stretching across 110 countries. The company, a subsidiary of the International Data Group (IDG), delivers IT professionals, business executives, and investors with actionable insights enabling informed technology-related decisions.

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