Generative AI Applications to Grow to $58.5 Billion in 2028

Generative AI Applications to Grow to $58.5 Billion in 2028
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The market for generative AI (GAI) applications will grow from $6.2 billion in 2023 to $58.5 billion in 2028, with a CAGR of 56%, according to Omdia. The market for GAI applications erupted in 2023, as startups and hyperscalers released a wave of large language and diffusion models, the basic building blocks for GAI.

“Generative AI has very quickly brought the world to an inflection point, with the technology market rushing forward in what can only be termed a stumbling sprint,” noted Brad Shimmin, Omdia Chief Analyst, AI & Data Analytics.

GAI is a subset of the larger AI software market. The sudden and intense interest in GAI is propelling the entire AI software market beyond previous forecasts. Omdia estimates GAI will add $3 billion to its prior AI market estimate in 2023 and $13 billion in 2027, leading to a total AI software market of $160 billion in 2027.

GAI is in the innovation stage and market players are entering a phase of great experimentation and some confusion. The forecast also mentions significant risks, as the current version of GAI has shown to be unreliable in several aspects, including bias, hallucinations, factual errors, and copyright infringement, and its associated costs are currently much higher than traditional AI approaches.

Over the forecast period, Omdia expects the top four use cases for GAI will be virtual assistants, building generative models of the real world, writing assistants, and automated code generation and assistance. By industry, consumer-targeted uses and media and entertainment will be the largest verticals.