Generative AI Market To Hit USD ~255 Billion by 2033

Tajammul Pangarkar
Tajammul Pangarkar

Updated · Jun 18, 2024

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Introduction

The Generative AI market is experiencing explosive growth, with an expected increase in global market size from USD 13.5 billion in 2023 to an estimated USD 255.8 billion by 2033. This represents a CAGR of 34.2%. The technology’s broad applications across various industries, including entertainment, advertising, education, and gaming, underscore its potential to automate and significantly enrich creative processes.

The key growth drivers for the Generative AI market include its application in healthcare for diagnostic algorithms and clinical research, and in marketing & advertising for automated content creation and personalized marketing. In addition, the technology’s versatility is showcased through multimodal capabilities, allowing it to process and generate content across different formats like text and images.

A notable development in the Generative AI landscape is Databricks’ acquisition of MosaicML for $1.3 billion in June. MosaicML is a forerunner in the field with its state-of-the-art MPT large language models, boasting over 3.3 million downloads of its MPT-7B and the recent release of MPT-30B, demonstrating the vast potential and demand for advanced generative AI solutions. This acquisition underscores the increasing recognition of Generative AI’s transformative capabilities across industries, with Databricks aiming to democratize AI and provide a robust platform for organizations to build, own, and secure their models. The collaboration is expected to significantly enhance the speed and cost-efficiency of model training, marking a pivotal moment in the democratization of AI technology.

In addition to these acquisitions, the funding landscape for Generative AI startups is also growing rapidly. Stability AI, known for its deep learning text-to-image AI model Stable Diffusion, secured $123.8M in funding through a convertible note, while Rephrase AI, specializing in text-to-video generation, raised $12.2M in a Series A funding round. Another notable mention is Runway AI, which received $237M in Series C funding for its generative AI video editing platform. These developments signify a burgeoning market ripe with innovation and investment, poised to redefine technological capabilities and applications.

The software component of Generative AI, which includes applications in natural language processing and image generation, leads the market due to its crucial role in enhancing operational efficiency and innovation across sectors. However, challenges such as concerns over data privacy, overestimation of capabilities, and unexpected outcomes are being addressed as the market matures.

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Key Takeaways

  • The Generative AI Market is projected to witness a robust CAGR of 34.2%, reaching an estimated value of USD 255.8 Billion by the year 2033.
  • The global Generative AI market was valued at USD 13.5 Billion in 2023, showcasing substantial growth potential over the forecast period.
  • The large language models segment led the market in 2023, capturing over 41.3% of the market share, and further significant growth is anticipated.
  • Transformer technology emerged as the dominant force in the Generative AI market in 2023, capturing more than 45.1% market share.
  • Media & Entertainment sector dominated among end-users, holding a market share of 24.3% in 2023, with a robust CAGR of 36.4%.
  • North America remained the leading region in the global Generative AI market, with a market share of 42.1% in 2023.
  • Generative AI is expected to contribute to a 21% increase in the United States’ GDP by 2030.
  • Over 75% of consumers express concerns about misinformation from AI, highlighting the importance of ethical AI development and usage.
  • ChatGPT achieved approximately 1 million users within its initial five days of launch, indicating significant user interest and adoption.
  • 64% of businesses believe that AI implementation will lead to increased productivity, driving further adoption across industries.
  • In China, 58% of companies are already utilizing AI technology, with an additional 30% considering its implementation, surpassing the adoption rates in the United States.
  • Generative AI usage is prevalent among Millennials and Gen Z, comprising 65% of total users, with 72% of them being employed individuals.
  • Nearly 6 in 10 users feel they are progressing towards mastering Generative AI, indicating a positive trend towards skill development and adoption.
  • 70% of Gen Z users report using Generative AI, with 52% expressing trust in its ability to aid in decision-making processes.
  • 52% of users find themselves using Generative AI more frequently over time, showcasing a growing reliance on AI-driven solutions.
  • 75% of users are interested in utilizing Generative AI to automate work tasks and improve work communications, highlighting its potential for enhancing workplace efficiency.
  • Among marketers, common uses of Generative AI include content creation, copywriting, creative thinking inspiration, market data analysis, and image asset generation, with adoption rates varying across applications.
  • 38% of users engage with Generative AI for fun or experimentation, while 34% utilize it for learning about topics of interest, indicating diverse usage patterns among individuals.
  • The shortage of skilled personnel poses a notable challenge to the growth of the Generative AI market, hindering effective implementation and adoption across industries.
  • In the landscape of Generative AI, key players such as IBM Corporation, Google LLC, Microsoft Corporation, and Amazon Web Services Inc. exhibit distinct strengths and technological innovations, shaping the market’s dynamics and competitiveness.

Generative AI Statistics

Generative AI Use by Country in 2024

  • India 73% of people use generative AI.
  • Australia 49% of people use generative AI.
  • USA 45% of people use generative AI.
  • UK 29% of people use generative AI.

Demographics and Employment

  • 65% of users are Millennials or Gen Z.
  • 72% of these users are employed.

Usage Trends

  • 52% of users are relying more on generative AI over time.
  • 75% want to use it for automating work tasks and improving communication.
  • 38% use it for fun, and 34% for learning new things.

Skepticism and Potential Adoption

  • 88% of non-users are unsure about generative AI’s impact.
  • 40% of non-users are not familiar with generative AI.
  • 32% of non-users find it unnecessary.
  • Yet, 70% might use it with more information and education.
  • 64% of non-users want better safety and security.

Workplace Adoption and Concerns

  • 61% of desk workers see potential in using generative AI.
  • 54% worry about its accuracy and bias.
  • 73% are concerned about new security risks.

Confidence Levels

  • 83% of C-suite leaders are confident in using generative AI responsibly.
  • Only 29% of individual contributors share this confidence.

Trust and Responsibility

  • Essential for trust human oversight, better security, trusted data use, and ethical guidelines.

IT Leaders’ Views

  • 86% believe generative AI will be key in their organizations.
  • 33% plan to prioritize its implementation within 18 months.
  • 99% stress the need for responsible use measures.

Marketing and Generative AI

  • 51% of marketers are trying it out.
  • They use it mainly for content creation, copywriting, and market analysis.
  • They expect to save about 5 hours per week by using generative AI.

Sales Professionals’ Insights

  • 84% of early adopters saw increased sales.
  • 53% don’t know how to maximize its value.
  • 49% are worried about job security.

Service Professionals’ Adoption Rate

  • Only 24% are using generative AI.
  • 90% of these users reported faster customer service.

Recent Developments

Major Acquisitions

  • Databricks acquired MosaicML for $1.3 billion, marking one of the first major acquisitions in the generative AI sector.
  • Thompson Reuters Corp purchased Casetext, an AI legal assistant, for $650 million, showing significant interest in AI-powered legal tech.
  • Other acquisitions include Ramp Business acquiring Caldera Labs, Nitor Infotech by Ascendion for its generative AI expertise, and Tanla Platforms Ltd. taking over ValueFirst Digital Media.

Product Launches and Updates

  • Google renamed its chat tool Bard to Gemini, introducing image generation capabilities and launching a Gemini app for mobile devices. They also unveiled ImageFX, an AI image creator, and announced a partnership with Hugging Face.
  • OpenAI introduced Sora, a video-generation model capable of turning text instructions into video scenes, currently in beta testing.
  • Nokia announced MX Workmate, a large language model for edge operational technology environments, aiming for availability by the end of 2024.
  • Slack AI was launched with features focusing on summarization and search within the team communication platform.
  • Apple hinted at significant AI-related announcements to come later in the year and contributed to open-source AI models.
  • Stable Diffusion 3 was released in early preview, promising improved performance in text-to-image generation.

Funding Rounds

  • Jasper AI, specializing in AI marketing copilot services, acquired Init ML SAS from Stability AI Ltd, enhancing its image editing capabilities.
  • Moonshot AI, a Chinese generative AI startup, raised $1 billion in a new funding round, reaching a post-money valuation of $2.5 billion.
  • Magic AI announced a $117 million Series B funding round led by NFDG Ventures, planning to further develop its AI programmer.

Use Cases

Marketing and Content Creation

  • In marketing, generative AI optimizes A/B testing, SEO research, and market analytics. It also scales and personalizes sales and marketing content, including outreach.
  • For content creation, AI-generated blog posts and social media content generation are streamlining the creation process, ensuring engaging, relevant output.

Customer Support

  • Automation in customer support through virtual assistants and chatbots is significantly improving efficiency. Thanks to advanced Natural Language Processing (NLP) techniques, these AI-driven tools can engage in natural conversations.

IT and Software Development

  • Automated code generation and template-based generation are facilitating faster software development and bug fixing, highlighting generative AI’s impact in IT.

Healthcare

  • In healthcare, generative AI is making strides in medical image synthesis for diagnostics, drug discovery and development, and personalized medicine. Applications range from synthetic MRI and CT scan image generation to predicting drug interactions and tailoring treatment plans based on genetic data.

Art and Music

  • Creativity is another area where generative AI shines, with algorithmic art generation and music composition algorithms offering new avenues for artists and musicians. This technology enables the creation of unique artworks and music compositions, pushing the boundaries of traditional creative processes.

Key Players Analysis

IBM

IBM has made significant strides in the generative AI sector with various strategic initiatives and collaborations. In 2023, IBM launched the watsonx Code Assistant, a generative AI-powered tool designed to enhance code quality and developer productivity by providing AI-driven code recommendations based on curated enterprise data. This tool is part of IBM’s broader watsonx platform, which includes a suite of AI assistants aimed at modernizing enterprise applications.

Additionally, IBM established a Center of Excellence for generative AI within IBM Consulting, aiming to leverage their deep AI expertise across various industries, including finance, healthcare, and government sectors. In terms of collaborations, IBM has partnered with NatWest to enhance their virtual assistant, Cora, with generative AI capabilities, and with SAP to develop AI solutions for the consumer packaged goods and retail industries. These initiatives highlight IBM’s commitment to integrating generative AI to drive innovation and efficiency across different business functions.

OpenAI

OpenAI has been leading the way in the field of generative AI, continuously introducing new models and features to enhance AI’s capabilities and accessibility. In 2024, they launched several key updates and products. The introduction of GPT-4 Turbo was a significant improvement in instruction following, and it added a new JSON mode for developers, making it easier to integrate into various applications. A notable feature is the ability for reproducible outputs and the inclusion of log probabilities for output tokens, offering greater control and predictability for developers using OpenAI’s APIs.

One of the most anticipated developments was the introduction of GPT-5, which was expected to advance beyond its predecessors in learning abilities and integration with external knowledge bases. GPT-5 is not limited to text but can handle audio, images, and coding, making it a versatile tool across various sectors, including advertising, marketing, media production, education, and scientific research.

These advancements by OpenAI are set to transform the generative AI landscape, offering more personalized, efficient, and creative AI-driven solutions across a broad spectrum of industries. The emphasis on ethical AI development and responsible use remains a priority, ensuring that innovations contribute positively to society and industries alike.

MOSTLY AI

MOSTLY AI is a company that was founded in Vienna in 2017. The company specializes in generating synthetic data, which is used to address the challenges posed by traditional data anonymization methods. This has become particularly important following the introduction of GDPR in Europe in 2018.

MOSTLY AI is a pioneer in this field and has developed a Synthetic Data Platform that demonstrates the vast potential of synthetic data. The company’s mission is to provide organizations with smart and safe synthetic data in an ethical and responsible way. By doing so, they aim to make data a tool for building a smarter and fairer future for everyone.

Google LLC

Google LLC has been actively contributing to the generative AI sector through a series of strategic moves and product launches. These efforts underscore Google’s commitment to integrating advanced AI technologies across its services and product lines. In 2023, Google introduced Gemini, its largest and most capable AI model to date. This model is designed to be multimodal and flexible across various platforms, ranging from mobile phones to data centers. It has been integrated into products like Bard and Pixel 8 Pro, offering developers and Google Cloud customers access to advanced AI capabilities.

Furthermore, Google launched Bard, an experimental platform that allows users to interact with generative AI. Over time, Bard has evolved, incorporating coding abilities, visual capabilities, and connections to more Google apps and services. This evolution has paved the way for its integration with Google Assistant.

In addition to Bard, Google has made significant enhancements to its flagship Search product, employing generative AI to provide users with AI-powered overviews of information. This initiative makes it easier for users to uncover insights and complete tasks more efficiently. It represents a leap forward in making search engines more intuitive and helpful for users, reflecting Google’s commitment to utilizing AI to improve user experience and access to information.

The integration of AI into Search and the introduction of Bard signify Google’s strategy to harness generative AI’s potential. Google aims to improve the accessibility and utility of information through these developments, reflecting its broader mission to organize the world’s information. These efforts also underscore Google’s leadership in pushing the boundaries of AI technology, creating innovative products and services that cater to the evolving needs of its users.

D-ID

D-ID is a leading company in generative AI known for its unique offerings in digital human creation. The company recently launched the next-generation Creative Reality™ Studio in December 2022, which is a platform capable of generating and animating faces with AI-generated text in a single interface. This technology integrates D-ID’s proprietary AI with advanced tools like GPT-3 and Stable Diffusion, allowing creators to produce digital composite faces and speech in 119 languages from user descriptions. With this platform, content creators and professionals can generate engaging content with AI-generated video narrators, significantly reducing the time and resources required for video content creation.

D-ID has also launched innovative products like D-ID Agents, which blend advanced large language models (LLMs) with conversational AI to deliver personal and engaging digital interactions. These agents use voice cloning and video generation technologies for customization at an unprecedented level. The company’s partnership with Microsoft through the Azure OpenAI Service demonstrates its technical capabilities. This partnership has enabled D-ID to offer a more natural conversational experience by combining realistic digital avatars with generative AI, reducing development time and allowing for quick scaling to meet user demand.

D-ID’s work shows the transformative potential of generative AI in creating more human-centric digital interactions. With products like the Creative Reality™ Studio and D-ID Agents, as well as strategic collaborations like that with Azure OpenAI Service, D-ID is at the forefront of revolutionizing how companies interact with their customers through digital platforms.

Amazon Web Services, Inc.

Amazon Web Services, Inc. (AWS) has recently made significant developments in the generative AI sector, in order to promote innovation across various industries. One of these advancements is the launch of Amazon Bedrock, a fully managed service that is now available to customers. This platform allows users to easily build and scale generative AI applications by using foundation models (FMs) from the top AI companies, all through a single API. Amazon Bedrock is designed to simplify development while ensuring privacy and security, which are key concerns for businesses interested in adopting generative AI technologies.

In addition, AWS has announced a strategic partnership with Anthropic, aimed at advancing safer generative artificial intelligence. This partnership involves Amazon’s investment of up to $4 billion in Anthropic, which will allow Anthropic’s future foundation models, including the notably advanced and safe model Claude 2, to be built, trained, and deployed using AWS’s high-performance, low-cost machine learning accelerators. These models will be accessible to millions of developers and AWS customers, offering unique features for model customization and fine-tuning capabilities through Amazon Bedrock.

These initiatives are part of AWS’s broader strategy to make generative AI more accessible and practical for a wide range of business applications, from enhancing productivity to transforming customer experiences. Through these efforts, AWS aims to lead the way in the responsible development and deployment of generative AI, ensuring that businesses of all sizes can leverage the latest advancements in AI technology.

Adobe Inc.

Adobe Inc. is making significant progress in the generative AI sector, demonstrating its commitment to innovating across its product suite to enhance user creativity and productivity. The company has introduced Firefly, a family of creative generative AI models, which has been integrated into Adobe Photoshop. This integration has enabled the development of features like Generative Fill, which allows users to add, extend, or remove content from images with ease, using simple text prompts.

This integration represents the beginning of Adobe’s broader initiative to incorporate generative AI into its Creative Cloud, Document Cloud, Experience Cloud, and Adobe Express workflows. The aim is to serve as a creative co-pilot for users, empowering them with AI tools that streamline the creative process and unlock new possibilities.

Adobe has also unveiled significant AI-powered updates across its Creative Cloud suite, including native integration of Firefly-powered generative AI capabilities in Photoshop, Illustrator, and Adobe Express. These advancements, including a new standalone Firefly web application and Adobe Express Premium, underscore Adobe’s dedication to empowering creative professionals and hobbyists alike with AI tools that streamline the creative process and unlock new possibilities.

In addition, Adobe is venturing into digital documents with generative AI. The company has introduced AI Assistant, a conversational engine for Adobe Acrobat workflows. This move aims to redefine document productivity by facilitating more efficient interactions with digital documents. The AI Assistant can generate summaries, provide intelligent citations, and offer formatted output for a variety of document types, heralding a new era of document management and productivity enhancement.

Synthesia

Synthesia, a popular AI video creation platform, has recently raised $90 million in a Series C funding round, which has valued the company at $1 billion. Accel led this funding round, with participation from NVentures (NVIDIA’s venture capital arm) and existing investors such as Kleiner Perkins, GV, and Firstmark Capital. Synthesia’s platform is transforming enterprise video production by allowing users to create high-quality instructional videos using AI avatars, which significantly reduces production time and costs while increasing engagement.

The company has seen rapid growth, with a year-over-year user growth rate of 456% and over 12 million videos produced. Synthesia’s revolutionary approach and dedication to incorporating generative AI into video production have attracted a diverse range of enterprise clients, including Tiffany’s, IHG, Moody’s Analytics, and several entities of the United Nations, with 35% of the Fortune 100 already using its services.

Synthesia is committed to pushing the boundaries of AI research and development, with a focus on neural video synthesis to create photorealistic synthetic humans that look and move realistically. The company’s technology, developed in-house, has resulted in breakthroughs in AI, contributing to the field of neural rendering techniques. Synthesia emphasizes ethical content creation, adhering to responsible AI practices and ensuring content moderation. Its research and development efforts are a collaboration with institutions such as the Technical University of Munich and University College London, highlighting its commitment to cutting-edge innovation in the generative AI sector.

Microsoft

Microsoft has significantly expanded its efforts in the generative AI sector, collaborating with various companies and launching products to leverage AI’s transformative potential across different industries. One of its most significant collaborations is with NVIDIA, which has fortified Microsoft Azure’s capabilities by introducing the NVIDIA Grace Blackwell Superchip to enhance AI offerings for both customers and Microsoft’s own products. This partnership also involves integrating NVIDIA DGX Cloud with Microsoft Fabric to streamline custom AI model development, and incorporating NVIDIA Omniverse Cloud APIs into Azure, fostering an ecosystem for industrial design and simulation tools.

Microsoft Copilot has also been enriched with NVIDIA’s AI and computing platforms, alongside new NVIDIA generative AI Microservices set to enhance Azure AI for enterprise, developer, and healthcare applications.

In healthcare, Microsoft and Epic are deepening their alliance to propel generative AI’s role in addressing critical industry challenges, such as clinician burnout and staffing shortages. This strategic initiative aims to integrate conversational, ambient, and generative AI technologies across Epic’s electronic health record ecosystem, enhancing patient care, operational efficiency, and the healthcare experience overall.

Moreover, Microsoft has introduced generative AI and data solutions specifically designed for the retail sector through Microsoft Cloud for Retail. These innovations provide copilot experiences that assist retailers in creating personalized shopping experiences, boosting store associate performance, and unlocking valuable customer insights. This suite of solutions empowers retailers to harness the power of AI to navigate challenges such as high associate turnover, shifting shopping habits, and the untapped potential of siloed data.

Conclusion

The market for Generative AI is expected to experience significant growth in the coming years, thanks to various factors such as technological advancements, strategic investments, and diverse applications. As more businesses recognize the potential of Generative AI to streamline operations and boost efficiency, the market is expected to expand tremendously, providing exciting prospects for innovation and value creation.

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Tajammul Pangarkar

Tajammul Pangarkar

Tajammul Pangarkar is a CMO at Prudour Pvt Ltd. Tajammul longstanding experience in the fields of mobile technology and industry research is often reflected in his insightful body of work. His interest lies in understanding tech trends, dissecting mobile applications, and raising general awareness of technical know-how. He frequently contributes to numerous industry-specific magazines and forums. When he’s not ruminating about various happenings in the tech world, he can usually be found indulging in his next favorite interest - table tennis.

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