Omdia projects 124% growth in generative AI software market for 2024 as enterprises explore potential

Artificial intelligence

LONDON,  June 18, 2024  Generative AI (GenAI) software revenue will increase at a 53% CAGR from 2023 to reach $58 billion by 2028, Omdia’s latest Artificial Intelligence Software Market Forecasts reveals. GenAI software revenue will grow by 124% in 2024, revised upward from the prior forecast of 100%.

Many vendors with large language models (LLMs) are seeing revenue run rates that suggest triple-digit revenue growth in 2024. Top SaaS vendors have been continually adding new GenAI features to existing products, sometimes monetizing that with premium-tier subscription offerings. Some GenAI tools, like the GitHub CoPilot, are experiencing a surge in adoption.

Enterprises have also been eager to allocate GenAI budgets in 2024 (and expect to increase those budgets in 2025) to see what the technology offers and to stay ahead of competitors, as shown in Omdia’s Generative AI Enterprise Survey: Early Adopters – 2024. Omdia expects market growth to slow over the forecast horizon, primarily due to market maturation but also as actual GenAI results in some cases fail to meet heady expectations and overinvestment. The Omdia survey shows that the majority of enterprises who have deployed GenAI say it is meeting expectations, but that sentiment is not unanimous, and some projects are failing to deliver.

“While we see a near-term frenzy in GenAI interest and actual adoption,” said Neil Dunay, Omdia Principal Forecaster, “the prospects for disillusionment are real.”

Some of the top use cases for GenAI in 2024 will be automated code development, virtual assistants, computer-aided art and photography, video and audio production, and writing assistants.

Growth in GenAI is eclipsing growth in predictive (traditional) AI software revenue, which is entering a more mature phase. Omdia forecasts predictive AI software revenue will reach $136 billion in 2028, a 14% CAGR.

Updated twice a year, Omdia’s Artificial Intelligence Software Market Forecasts covers both generative and predictive AI, forecasting revenue for approximately 160 use cases by 20 industry sectors across 8 world geographic regions. Revenue is estimated only for the AI technology portion (AI value-add), not the entire software solution.

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