05 Sep 2024 Beyond AI Large Language Models: an overview of the AI industry
While much of today’s attention is focused on Large Language Models, the field of Artificial Intelligence encompasses many other sectors. In the following we provide a brief overview of the AI market and its key players.
According to Statista, the AI market is projected to reach a size of $184 billion in 2024 and it is expected to grow at a CAGR of 28.5%, reaching $827 billion by 2030. The number of AI users is projected to rise from 314 million in 2024 to 729 million by 2030. The main sectors within the AI market include computer vision (image and video processing), AI robotics, machine learning, autonomous and sensor technology, and natural language processing (text and speech processing).
The graph below shows historical data and projections on the size of the AI industry (Source: Statista).
Machine learning is the largest segment, projected to account for 43.4% of the total AI market in 2024. It is followed by natural language processing, which is expected to represent 19.8% of the total market volume. Generative AI models, such as ChatGPT[1] and Gemini,[2] primarily fall under natural language processing, although they are also capable of generating images and videos. The market for generative AI is expected to reach $36 billion in 2024, constituting 19.6% of the total AI market. This segment is expected to grow nearly tenfold by 2030, reaching $356 billion and comprising 43% of the total AI market volume.
Regarding industries that employ AI technology, the leaders in 2022 were healthcare (15.7% of the total AI market share), finance (13.7%), manufacturing (13.7%), and business and legal services (13.6%).
The market is dominated by the United States and China, which account for 27.2% and 18.6% of the market, respectively. Japan follows at a distant third place with 4.4% of the market share. See the graph below (Source: Statista).
The largest AI companies by market capitalization are the U.S. tech giants Apple, Microsoft, Nvidia, Alphabet, and Meta. Information technology is the top sector in S&P 500 with over 30% market cap. Nvidia, which produces the chips essential for launching AI products, has been one of the biggest beneficiaries of the AI boom. Its market capitalization has grown nearly ten times since the beginning of 2023, reaching $3 trillion (nearly 7% of the market cap of the index S&P 500). Investors believe that the rapid development of AI solutions will require increasing computational power, which Nvidia chips are able to provide.
Following Nvidia’s success, other major companies like Amazon, Google, Meta, Microsoft, and Tesla are investing in developing their own AI chip designs. Notably, Nvidia does not manufacture its chips; instead, it relies on TSMC, a Taiwanese chip producer, which has also greatly benefited from the AI revolution. However, analysts warn that TSMC may struggle to expand its capacity fast enough to meet the booming demand for AI chips (source: https://www-economist-com.eu1.proxy.openathens.net/business/2024/08/26/what-could-stop-the-nvidia-frenzy)
Chinese companies are also important players in the AI market. U.S. restrictions on Chinese firms’ access to technologies developed by U.S. companies have driven China to invest heavily in its own AI chip design and manufacturing. Analysts suggest that in the future, Chinese tech giants like Huawei, Tencent and Horizon Robotics could pose serious competition to Nvidia in the AI chip market (source: https://www-economist-com.eu1.proxy.openathens.net/business/2024/08/26/what-could-stop-the-nvidia-frenzy)
Overall, AI companies are currently focused not only on developing AI software solutions but also on the hardware that powers them, making chip designers and manufacturers crucial actors in the AI landscape.
For further information, you can consult following links:
https://www.statista.com/outlook/tmo/artificial-intelligence/worldwide
[1] It is a chatbot and virtual assistant developed by OpenAI and launched on November 30, 2022 by OpenAi and Microsoft. OpenAI is an American artificial intelligence research organization founded in December 2015 by, among others, Sam Altman, Elon Musk, Ilya Sutskever and Greg Brockman, headquartered in San Francisco.
[2] It is a generative artificial intelligence chatbot developed by Google and launched on March 2023.