The global market for artificial intelligence (AI) products and services is poised for explosive growth, with projections indicating an annual growth rate (AGR) of 40-55%. According to Bain & Company’s 5th annual Global Technology Report, this trajectory could see the market reach up to $990 billion by 2027.
The report outlines that AI workloads are expected to grow at a rate of approximately 25-35% annually through the same period. Bain estimates that the total addressable market for AI-related hardware and software will likely expand between 40% and 55% each year for at least the next three years. This growth could result in a market size between $780 billion and $990 billion by 2027. While fluctuations in supply and demand may introduce some volatility, the report emphasizes that a durable long-term growth trajectory for AI seems firmly established.
As AI continues to proliferate, the demand for computing power will necessitate a significant expansion of large data centers over the next five to ten years. “AI will spur growth in data centers, from today’s 50-200 megawatts to more than a gigawatt,” the report states. This shift suggests that while large data centers currently cost between $1 billion and $4 billion, they may require investments ranging from $10 billion to $25 billion within the next five years.
The anticipated surge in AI demand will also drive a spike in the need for graphics processing units (GPUs). Bain’s projections indicate that the total demand for certain upstream components could increase by 30% or more by 2026. However, this heightened demand could also lead to a shortage of semiconductors. The report warns that if data center demand for current-generation GPUs were to double by 2026, suppliers would not only need to ramp up their output but also that chip packaging component manufacturers would need to nearly triple their production capacity to keep pace.
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The rapid expansion of AI is expected to disrupt the technology sector comprehensively. Innovation will spread beyond major hyperscalers to smaller cloud service providers (CSPs), enterprises, software vendors, and even government entities. The report highlights that advancements in storage technology will be necessary to meet the demands of generative AI applications. Additionally, the rising need for data preparation and mobility is likely to propel growth in data management software.
While tech services will experience high demand in the medium term—especially as customers seek expertise in AI deployment and data modernization—Bain forecasts that significant portions of these services may eventually be replaced by software solutions over time. This transition will necessitate a re-evaluation of workforce skills and capabilities in the tech industry.
In summary, the outlook for the AI market is remarkably optimistic, with significant investment and innovation expected to reshape various sectors. As the market evolves, stakeholders will need to navigate both the opportunities and challenges posed by this rapid growth, particularly concerning infrastructure and skill development. The landscape of technology is set to change dramatically as AI becomes increasingly integral to business operations and decision-making processes worldwide.
