News & Analysis

Omdia forecasts GenAI to grow

18th June 2024
Caitlin Gittins

Omdia's latest Artificial Intelligence Software Market Forecasts reveal that revenue from Generative AI (GenAI) software is projected to grow at 53% CAGR from 2023, reaching $58 billion by 2028. 

The forecast for GenAI software revenue in 2024 has been revised upward to a 124% increase from previous estimates of 100%.

Many vendors employing large language models (LLMs) are witnessing significant revenue run rates, indicating triple-digit growth expected in 2024. Software as a Service (SaaS) providers are consistently enhancing their offerings with new GenAI capabilities, often introducing these through premium-tier subscription models. Tools like GitHub CoPilot are particularly notable for their accelerated adoption.

Businesses are actively allocating budgets towards GenAI initiatives in 2024, with plans to increase investment into 2025, driven by the desire to explore the technology's potential and maintain competitive advantage, as highlighted in Omdia's Generative AI Enterprise Survey: Early Adopters – 2024.

However, Omdia anticipates that market growth will moderate over the forecast period, attributed to maturation within the market and instances where GenAI outcomes may not meet initial high expectations or justify extensive investment. While a majority of businesses report that deployed GenAI meets expectations, there are cases of projects falling short.

“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.”

Key use cases for GenAI in 2024 include automated code development, virtual assistants, computer-aided art and photography, video and audio production, and writing assistants.

The growth trajectory of GenAI is outpacing that of traditional predictive AI software revenue, which is entering a more mature phase. Omdia forecasts that predictive AI software revenue will grow to $136 billion by 2028, representing a 14% CAGR.

Updated biannually, Omdia's Artificial Intelligence Software Market Forecasts encompass both generative and predictive AI, projecting revenue across approximately 160 use cases spanning 20 industry sectors and 8 global regions. Revenue estimates focus solely on the AI technology component (AI value-add), excluding the entire software solution.

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