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SAN FRANCISCO — A new report by the consulting firm Bain and Company estimates the market for AI-related hardware and software could grow from $185 billion last year to between $780 billion and $990 billion by 2027.
Bain expects the AI market to grow between 40% and 55% annually during the period.
The findings are in the fifth-annual “Global Technology Report,” which the firm released this week. The report provides insights on new waves of growth in the technology industry due to “disruptions from the fast-changing AI advancements.”
The report focuses on several “opportunities" that could drive the market’s growth: data centers and chips; sovereign and enterprise AI initiatives; and software development.
Opportunities in Data Centers and Chips
Bain estimates that AI workloads could grow 25% to 35% per year through 2027. AI should spur growth in data centers, from 50-200 megawatt data centers today to gigawatt data centers. Bain says if large data centers cost between $1 billion and $4 billion today, they could cost between $10 billion and $25 billion in five years.
The firm believes the changes are expected to have “huge implications” on the ecosystems that support data centers, including infrastructure engineering, power production and cooling.
Bain predicts the AI-driven demand for graphics processing units (GPUs) could increase total demand for certain upstream components by 30% or more by 2026. Growing demand for AI computing power could strain supply chains for data center chips, personal computers and smartphones.
The trends, paired with geopolitical tensions, could "trigger the next shortage of semiconductors."
See more: 10 Top AI Chip Companies
Opportunity in Sovereign AI
Bain says the “post-globalization movement in technology is spreading” from the pandemic-era chip shortage to data, security and AI privacy concerns.
Governments worldwide — including Canada, France, India, Japan, and the United Arab Emirates — are spending billions of dollars to subsidize sovereign AI, according to Bain.
They’re investing in domestic computing infrastructure and AI models developed within their borders and trained on local data.
See more: Collaborative Governance is the Path to Globally Inclusive and Ethical AI
Opportunity in the Enterprise AI Space
Bain believes as enterprises "face rising challenges" in managing suppliers, protecting data and controlling total cost of ownership (TCO), small language models with algorithms that use retrieval-augmented generation (RAG) and vector embeddings could see demand increase, as they can handle computing, networking and storage tasks close to where data is stored.
See more: What is Enterprise AI?
Opportunity in Software Development
Generative AI appears to save about 10% to 15% of total software engineering time, according to Bain, but “most companies aren’t making the most of these savings.”
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Bain believes that GenAI can save up to 30% of software development time, and the software industry should seize the potential productivity gains. The firm stresses that in the last two years, the median annual revenue growth for a group of about 90 publicly traded software-as-a-service (SaaS) companies declined by 16 percentage points.
Here's the online "Global Technology Report."
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