According to the research conducted by Market.us, The market for Agentic AI in Smart Cities is on a remarkable growth trajectory. By 2034, it is projected to reach an impressive USD 58 Billion, up from USD 1.88 Billion in 2024. This reflects a robust compound annual growth rate (CAGR) of 40.90% over the ten-year forecast period from 2025 to 2034. In the current landscape, North America stands out as a leader in this sector. In 2024 alone, it claimed a substantial 45.1% of the global market share, generating revenues of USD 0.8 billion.
The growth of the Agentic AI in smart cities market can be attributed to several key factors. Firstly, the rising demand for improved urban planning and public safety significantly propels the adoption of AI solutions. Additionally, environmental concerns drive cities to adopt smart technologies that can help manage resources more effectively and reduce carbon footprints. The increasing integration of IoT devices, which facilitate real-time data collection and analysis, also plays a vital role in driving the market forward.
The demand for Agentic AI in smart cities is increasing as municipalities recognize the potential benefits of such technologies. This demand is particularly strong in areas related to public safety, transportation management, and sustainable urban planning. Cities facing significant urban challenges, such as overcrowding, high traffic volumes, and environmental degradation, show a particular interest in deploying agentic AI solutions to address these issues effectively.
Investment opportunities in the Agentic AI market are robust, with significant potential returns for stakeholders. Investors are particularly interested in startups and companies that are pioneering new AI applications and tools tailored for urban management. Governments and private entities are increasingly collaborating to fund innovative projects that promise to transform city living, indicating a promising growth trajectory for investments in this sector.
Key Takeaways
- The global Agentic AI in Smart Cities market is set for explosive growth, expected to reach USD 58 billion by 2034, up from USD 1.88 billion in 2024. This represents a CAGR of 40.90% over the forecast period from 2025 to 2034.
- The Solution segment held a dominant position in 2024, capturing over 64.2% of the market share. This growth is driven by the rising adoption of AI-powered solutions that enhance smart city infrastructure.
- The On-Premises segment led the market, accounting for more than 58.4% of the total share. Many city administrations and enterprises prefer on-premises deployment due to data security, regulatory compliance, and greater control over AI systems.
- The Machine Learning & Deep Learning segment dominated the market, holding over 26.7% of the total share. This trend is fueled by the increasing demand for AI models that analyze vast amounts of urban data in real time.
- The Smart Governance & Administration segment captured more than 23.9% of the market share in 2024. Governments are investing heavily in AI-driven platforms to enhance urban planning, automate administrative processes, and improve city services.
- North America dominated the Agentic AI in Smart Cities market, capturing over 45.1% of the global market share. The region generated approximately USD 0.8 billion in revenue in 2024.
- The U.S. market alone is expected to reach USD 0.678 billion in 2024, growing at a CAGR of 39.2%. The rapid adoption of AI technologies in urban management is driven by rising investments in smart infrastructure, sustainability initiatives, and the push for more efficient city operations.
Regional Analysis
The U.S. market for Agentic AI in smart cities is poised for significant growth, projected to reach a value of approximately $678 million by 2024. This growth is driven by a combination of technological advancements, increasing investments, and a strong demand for AI-powered solutions across various sectors.
Technological innovation is at the heart of this expansion, with Machine Learning and Cloud-based deployment emerging as the dominant technologies and deployment modes in 2024. Machine Learning facilitates a wide range of AI-driven solutions including predictive analytics, while Cloud-based solutions offer scalability and cost-effectiveness, crucial for the deployment of AI applications.
The market is also characterized by a diverse range of applications and a strong demand from large enterprises, which dominate the market in terms of revenue generation. This is attributed to their financial resources and organizational capabilities to invest in advanced AI-driven technologies and initiatives.
Furthermore, the U.S. region benefits from significant governmental support, which is manifest in substantial funding for AI research and development through agencies like the National Science Foundation (NSF) and the Defense Advanced Research Projects Agency (DARPA). Such initiatives not only bolster the technological infrastructure but also promote the integration of AI into public services and infrastructure projects, making the U.S. a leading market for Agentic AI applications in smart cities.
North America’s leadership in the Agentic AI market for Smart Cities in 2024, where it captured over 45.1% of the market share generating USD 0.8 billion in revenue, can be attributed to several key factors that uniquely position the region for such success.
Firstly, the region boasts a robust technological infrastructure which is fundamental for the development and integration of advanced AI systems. North America is home to some of the world’s leading tech giants and innovative startups, providing a fertile ground for technological advancements and adoption. This ecosystem not only drives innovation but also facilitates the rapid deployment and scaling of AI solutions across urban environments.
Secondly, there is significant government and institutional support for AI research and development. Initiatives and funding from bodies such as the National Science Foundation and collaborations between the private sector and federal agencies underpin the strategic emphasis on harnessing AI for urban management and public services. This has led to the implementation of AI in various facets of city management, from traffic control to public safety, enhancing efficiency and sustainability.
Furthermore, North America benefits from having a highly skilled workforce proficient in digital and AI technologies, which is crucial for the development, implementation, and maintenance of complex AI systems. This skilled labor force is continuously bolstered by leading academic institutions and continuous professional development opportunities in the tech sector.
Report Segmentation
Offerings Analysis
In 2024, the Solutions segment maintained a commanding presence within the Agentic AI in Smart Cities market, securing a significant 64.2% market share. This substantial proportion reflects the increased adoption of AI solutions that enhance efficiency and decision-making in smart city management. The focus on solutions rather than mere services suggests a mature market where end users are seeking comprehensive, integrated AI functionalities that address complex urban challenges comprehensively.
Deployment Analysis
Regarding deployment methods, the On-Premises model was predominant in the Agentic AI in Smart Cities market during 2024, with a substantial 58.4% share. This preference indicates a prevailing concern for security and data control among municipalities and city planners, who opt for on-premises installations to retain direct oversight over their critical infrastructure and sensitive data.
Technology Analysis
The Machine Learning & Deep Learning technologies led the Agentic AI in Smart Cities sector in 2024, holding a notable 26.7% of the total market. This leadership underscores the pivotal role these technologies play in processing vast amounts of urban data, thereby driving improvements in various smart city applications from traffic management to public safety, ensuring adaptive and intelligent city management systems.
Application Analysis
In the application spectrum, Smart Governance and Administration stood out in the Agentic AI in Smart Cities market, capturing an impressive 23.9% share in 2024. This dominance highlights the growing reliance on AI-driven solutions in enhancing governance frameworks and administrative efficiency, enabling cities to become more responsive to citizens’ needs and operational demands in urban management.
Report Scope
| Report Features | Description |
|---|---|
| Market Value (2024) | USD 1.88 Bn |
| Forecast Revenue (2034) | USD 58 Bn |
| CAGR (2025-2034) | 40.90% |
| Base Year for Estimation | 2024 |
| Historic Period | 2020-2023 |
| Forecast Period | 2025-2034 |
Key Market Segments
By Offerings
- Solution
- Smart Ticketing
- Traffic Management
- Passenger Information
- Connected Logistics
Others
- Services
- Deployment & Integration
- Consulting & Training
- Support & Maintenance
By Deployment
- Cloud Based
- On Premises
By Technology
- Machine Learning & Deep Learning
- Computer Vision
- Natural Language Processing (NLP)
- Blockchain-Enabled AI
- Others
By Applications
- Smart Governance and Administration
- Smart Transportation and Traffic Management
- Energy Management and Sustainability
- Public Safety and Security
- Smart Healthcare and Emergency Services
- Smart Infrastructure and Urban Planning
- Smart Retail and Commercial Zones
- Others (Smart Education and Public Libraries, etc.)
Top Key Players in the Market
- ABB Limited
- EnFuse Solution
- AVEVA Group plc.
- Cisco Systems, Inc.
- Telefonaktiebolaget LM Ericsson
- Honeywell International Inc.
- International Business Machines Corporation (IBM)
- Kapsch TrafficCom AG
- Huawei Technologies Co., Ltd.
- Microsoft Corporation
- Oracle Corporation
- ams-OSRAM AG
- SAP SE
- Schneider Electric SE
- Others
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