While the generative artificial intelligence (AI) technology – particularly in the form of platforms like OpenAI’s ChatGPT, Google’s (NASDAQ: GOOGL) Bard, and Midjourney – has taken the world by storm, it remained a relatively limited market in 2023.
The sector is, however, likely to significantly upscale in the coming years – at a 66% annual rate – according to a study published on January 10 and conducted by Sopra Steria Next, the consultancy arm of the Sopra Steria Group – a major Paris-based IT company.
Major benefactors of generative AI’s first wave were, as stated by the document, infrastructure and hardware providers such as Amazon (NASDAQ: AMZN) through its AWS cloud computing service and Nvidia (NASDAQ: NVDA) with its high-end semiconductors, including the upcoming H200.
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Next’s CEO, Fabrice Asvazadourian, compared this to the American gold rush phenomenon in which shovel-sellers and innkeepers grew significantly richer than the average prospector:
At the start of the gold rush, the first to strike it rich were actually the ones selling shovels and pickaxes; similarly, despite its lightning-fast market penetration, generative AI generated only limited revenue in 2023, essentially for cloud providers and their graphics processor manufacturers.
Generative AI will take off in 2024
Sopra Steria’s study finds that the generative AI market will likely grow more than tenfold by 2028, rising from $8 billion to $100 billion over the course of four years. Asvazadourian explained that 2024 is likely to mark the start of its exponential rise:
Our study shows that 2024 will mark the beginning of an exponential rise in the monetisation of generative AI, with more and more services being sold, both by major tech players as an extension of their current product ranges and by a multitude of startups that are beginning to emerge, targeting specific use cases.
The key reasons expected to contribute to this takeoff include the improvements in the regulatory framework governing AI technology, as well as the expectations that its reliability, utility, and versatility will significantly increase, making it a viable and common part of the operations of many businesses.
$100 billion in 2028, $1 trillion in 2030
While the growth predicted by Sopra Steria Next for the generative AI market is significant, an earlier report by Finbold indicates that, by the end of the decade, it is likely to become significantly larger.
In fact, the May 4 report stated that the overall market share of AI-related companies already stood at over $200 billion and that it is likely to grow to as much as $1.87 trillion by 2030, with the expectation that it will cross the $1 trillion threshold in 2028.
At the time, it was noted that the sector faced certain challenges, particularly stemming from the public trust levels in the technology. By early 2024, these concerns persist.
Platforms like ChatGPT – while still far from perfect – made significant strides in boosting reliability and accuracy but remain haunted by the legacy of blunders, such as a completely fictitious set of cases provided by the AI and presented in court that caused a group of lawyers great embarrassment in early 2023.