Artificial Intelligence Market Size Projected to Reach $1706.71 Billion by 2031, Investments to Support Adoption of AI and Growing Demand for Multimodal Al

market size was valued at US$ 193.25 billion in 2024 and is expected to reach US$ 1706.71 billion by 2031; it is estimated to register a CAGR of 37.8% during 2025–2031. The rise in adoption across various industries, government initiatives and investment to support the adoption of AI technology, and the burgeoning demand for multimodal AI are a few of the significant factors driving the global artificial intelligence market. Furthermore, increasing investments in industrial automation solutions and the growing popularity of agentic Al are likely to propel the demand for artificial intelligence in the future.Government Initiatives and Investments to Support Adoption of AI: Government initiatives toward the adoption of AI technology are driving the market. For instance, in January 2025, US President Donald Trump announced a landmark private sector investment of up to US$500 billion aimed at accelerating the development of artificial intelligence (AI) infrastructure within the United States. The initiative is designed to strengthen America's competitive position in this strategically vital sector. At the core of the announcement is a new joint venture called Stargate, formed by OpenAI, SoftBank Group Corp. (9984.T), and Oracle Corporation (ORCL.N). Stargate will focus on building advanced data center infrastructure across the country and is projected to generate over 100,000 new jobs nationwide. Backed by a coalition of equity partners, Stargate has already secured a US$100 billion initial investment for immediate deployment. The remaining US$400 billion is expected to be invested over the next four years as part of a phased capital allocation strategy. The initiative was formally launched at the White House, where SoftBank CEO Masayoshi Son, OpenAI CEO Sam Altman, and Oracle Chairman Larry Ellison joined Trump to underscore their commitment to positioning the United States as a global leader in artificial intelligence.Rising Importance of Ethical Al: As artificial intelligence (AI) becomes increasingly integrated into business operations across sectors, the focus on ethical AI is emerging as both a critical necessity and a significant growth driver for the global AI market. Businesses are recognizing that building trust with stakeholders, complying with regulatory frameworks, and avoiding reputational risks hinge on the ethical deployment of AI systems. This shift is creating robust demand for AI solutions that prioritize transparency, fairness, accountability, and data privacy. Enterprises are investing in tools that can detect and mitigate algorithmic bias, explain AI-driven decisions, and ensure responsible data usage. For instance, in May 2025, The PAL Impact Foundation (PALIF), a nonprofit dedicated to advancing technology-driven inclusive development, officially launched the Center for Accessible, Safe, and Ethical AI (CASE-AI). This initiative underscores PALIF's commitment to promoting AI that is equitable, inclusive, and responsible. The establishment of CASE-AI represents a strategic step toward ensuring that AI innovation is not only cutting-edge but also accountable and accessible—particularly for marginalized and underserved communities.Geographical Insights: In 2024, North America led the market with a substantial revenue share, followed by Europe and Asia Pacific.

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Market Segmentation

On the basis of component, the global artificial intelligence market is segmented into hardware, software, and services. The software segment is subsegmented by deployment into cloud and on premises. The software segment dominated the market in 2024.Based on organization size, the global artificial intelligence market is segmented into large enterprises and SMEs. The large enterprises segment dominated the market in 2024.In terms of industry vertical, the global artificial intelligence market is segmented into automotive, healthcare, manufacturing, retail and e-commerce, IT and telecom, BFSI, and others. The IT and telecom segment dominated the market in 2024.

Competitive Strategy and Development

Key Players: Accenture Plc, Advanced Micro Devices Inc, Google LLC, International Business Machines Corp, Intel Corp, Microsoft Corp, NVIDIA Corp, Amazon Web Services Inc, SAP SE, and SAS Institute Inc are among the key players profiled in the artificial intelligence market report.Trending Topics: Multimodal AI, Machine Learning, Ethical AI, among others

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Global Headlines

"IBM announced watsonx AI Labs, a new, developer-first innovation hub in New York City, designed to supercharge AI builders and accelerate AI adoption at scale. watsonx AI Labs connects IBM's enterprise resources and expertise with the next generation of AI developers in order to build breakthrough AI applications for business.""Accenture announced that Accenture Ventures has invested in Aaru, creators of the leading AI-powered prediction engine that simulates consumer behavior and preferences, driving stronger customer experiences, new growth opportunities and speed-to-market. As part of this collaboration, Accenture Song intends to integrate Lumen—Aaru's flagship model for the private sector—into its AI products and services across new product development, marketing, customer strategy, and customer service."

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Conclusion

Technological advancements and integration of advanced technologies such as machine learning, natural language processing (NLP), and robotic process automation (RPA); demand for generative Al; and development of explainable AI (XAI) and AI-powered cybersecurity solutions that reduce operating costs are expected to create opportunities for the market growth during the forecast period. An upsurge in the need for customized AI-based solutions, manufacturers' focus on developing small language models and open source advancements, and an increase in research and development activities also benefit the global artificial intelligence market.

The report from The Insight Partners, therefore, provides several stakeholders—including hardware providers, software providers, service providers, system integrators, and end users —with valuable insights into how to successfully navigate this evolving market landscape and unlock new opportunities.

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