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AI software market to reach $678B by 2028, North America leading charge: report

As artificial intelligence (AI) continues its run, the software segment of the industry is poised to be the leading driver of growth in the coming months, with North America leading the upswing.

In a Business Research Company report, the market capitalization for AI software could climb as high as $678 billion by 2028 from its present level of $222 billion. The predicted leap in market capitalization represents a compound annual growth rate (CAGR) of 32.2%, with experts predicting a surge post-2030.

The report goes on to stratify AI software space into four distinct areas, with deployment models touted to be responsible for the spike in valuation. By technology, the report bills natural language processing to continue its upward development, but computer vision could experience a growth spurt in the coming years.

Under the application vertical, voice, image, and text processing are expected to grow significantly as innovation reaches high levels. Per the report, utility is poised to grow for end users, with law firms, hospitals, financial service providers, and media outlets tipped to integrate AI software into their operations.

The report notes that the growth of the AI software sector can be attributed to the influx of capital into the ecosystem. Startup funding in the industry has been on an upward trajectory, rising from $1.3 billion in 2020 to $1.5 billion in 2021, with venture capital firms wading into the space.

A streak of acquisitions and high-profile partnerships have contributed to the buzz in the segment, but successful commercial launches appear to be the magic formula. OpenAI’s ChatGPT, Microsoft’s (NASDAQ: MSFTCopilot, and Google’s (NASDAQ: GOOGL) Gemini are recording sky-high adoption rates and myriad utilities in the space.

North America leads other jurisdictions by a country mile in the AI software segment, buoyed by the presence of several leading AI developers. Meta (NASDAQ: META), OpenAI, Google, and Microsoft all have their headquarters in the U.S., but recent forays into the EU have seen Europe occupy the second spot.

Given its rising prominence in the semiconductor market, Southeast Asia is making a valiant claim for the third spot while Arab nations continue to invest heavily in the space to close the gap.

Bright future for AI

Across the board, the future looks bright for AI, with hardware, emerging technologies, social media, finance, and healthcare verticals billed to make impressive gains before the end of the decade.

One report predicts a 100% spike for AI in social media, buoyed by the need to improve customers’ experiences and revolutionize personalized recommendations. Several key players have already begun rolling out new AI features for their social media platforms to ride the wave.

“The ability to delegate these tasks to an AI-powered assistant provides managers with the opportunity to focus on more strategic activities that can lead to improved productivity and a stronger social media presence,” a report on “AI in Social Media Market – Forecasts from 2024 to 2029” noted.

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