AI global market may touch $990 billion by 2027 with 40-55% annual growth rate: Report

The global market for artificial intelligence (AI)-related products and services is expected to grow at an annual rate of 40-55 per cent, and can reach up to $ 990 billion by 2027, a report has said.

Bain & Company's 5th annual Global Technology Report said AI workloads could grow about 25-35 per cent per year through 2027.

"Bain estimates that the total addressable market for AI-related hardware and software will grow between 40 per cent and 55 per cent annually for at least the next three years, reaching between $ 780 billion and $ 990 billion by 2027. Fluctuations in supply and demand will create volatility along the way, but a long-term, durable trajectory seems like it is here to stay," it said.

As AI expands, the need for computing power will radically expand the scale of large data centers over the next five to 10 years, it added.

"AI will spur growth in data centers, from today's 50-200 megawatts to more than a gigawatt. This means that if large data centers cost between $ 1 billion and $ 4 billion today, they could cost between $ 10 billion and $ 25 billion five years from now," the report said.

In addition to the need for more data centers, the AI-driven surge in demand for graphics processing units (GPUs) could increase total demand for certain upstream components by 30 per cent or more by 2026, the report projected.

However, these trends could trigger a scarcity of semiconductors, it said.

"If data center demand for current-generation GPUs were to double by 2026, not only would suppliers of key components need to increase their output, but makers of chip packaging components would need to nearly triple their production capacity to keep up with demand," it noted, adding that larger data centers could drive costs to $ 10-25 billion in five years.

AI's disruptive growth will continue to reshape the tech sector, as innovation spreads beyond the  hyperscalers to smaller cloud service providers (CSPs), enterprises, sovereigns, software vendors, and beyond, the report said.

Storage technology will advance to accommodate the needs of generative AI, while the growing need for data preparation and mobility will spur growth in data management software.

The report further said tech services will be in high demand in the medium term while customers lack the skills and expertise needed for AI deployment and data modernisation, but over time, significant portions of tech services will be replaced by software.