The global market for Artificial Intelligence or AI hardware and software is expected to grow rapidly, reaching between $780 billion and $990 billion by 2027, according to a report by Bain & Company. This growth could see annual increases of 40 to 55 per cent, the report said.

The report also highlights that larger data centers could cost between $10 billion and $25 billion over the next five years. David Crawford, chairman of Bain’s Global Technology practice, pointed out that generative AI is driving this change, though it’s complicated by shifts in global business processes.

Companies are moving past the experimental stage and starting to use generative AI at larger scales. Chief Information Officers (CIOs) will need to manage AI solutions to keep up with the fast-changing market.

Three main opportunities for growth in AI include:

1. Larger models and data centers
2. Enterprise and sovereign AI initiatives
3. Improved software efficiency and capabilities

AI workloads could increase by 25 to 35 per cent each year until 2027, requiring more computing power and expanding data centers significantly over the next decade. AI will spur growth in data centers, from today’s 50-200 megawatts to more than a gigawatt, the report said. The demand for graphics processing units (GPUs) could also rise by 30 per cent or more by 2026. 

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Meanwhile, the arrival of generative AI has added pressure on software development companies to demonstrate greater efficiency even as generative AI is already helping them save about 10 per cent to 15 per cent of total engineering time, according to the report.