What the rise of generative AI means for investors Allianz Global Investors

Generative AI: driving growth in the rapidly evolving AI market

Generative AI has experienced a substantial surge in demand from North America, particularly in the United States. The region’s robust technological ecosystem, investment in AI research, and the presence of leading tech companies have contributed to this demand. If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. There are far more than we have captured on this page, and we are enthralled by the creative applications that founders and developers are dreaming up. Below is a schematic that describes the platform layer that will power each category and the potential types of applications that will be built on top.

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Generative AI can create personalized recommendations, tailored advertisements, and customized products based on individual preferences and behavior. Moreover, the rising utilization of generative AI for creating virtual worlds in the metaverse and producing digital artworks using text-based descriptions and generating unique and innovative content is also propelling the market growth. Furthermore, the market has attracted significant investments and funding from both established companies and venture capitalists. This influx of capital has accelerated research, development, and commercialization efforts, further creating a favorable market outlook across the globe. The has been expanding globally, driven by advancements in machine learning techniques, increased availability of large datasets, and improvements in computing power. It has found applications in various industries, including natural language processing, computer vision, drug discovery, creative content generation, and more.

Strategic Development

The global was valued at USD 10.63 billion in 2022 and is expected to grow at a CAGR of 34.2% during the forecast period. On a regional level, the market has been classified into North America, Asia-Pacific, Europe, Latin America, and Middle East and Africa, where North America currently dominates the global market. AI’s rapid growth can increase energy demands and carbon emissions, especially as Generative AI requires significant computing power and data centers.

It can quickly generate customized content and products that cater to the needs of individuals. It is designed to perform specific tasks or make decisions based on predefined rules as compared to traditional AI models. It can generate tailored recommendations, product variations, and customized solutions that enhance Yakov Livshits customer satisfaction and engagement by analyzing user preferences and behavior. It also reduces the time and resources required for long processes and saves costs while increasing operational efficiency. Besides this, it allows businesses to streamline processes, enhance product development, and increase revenues.

6. Retrieval Augmented Generation

The demand for generative AI in North America is also fueled by the region’s entrepreneurial spirit and start-up ecosystem. Numerous AI start-ups are focused on developing innovative generative AI applications to meet the specific needs of various industries. Based on the End Use, the Generative AI Market segmentation includes Large Language Model (LLM), Content Generation, Code Generation, Video Creation, and Image & Art Generation, and others. By End Use, the Large Language Model (LLM) segment holds the majority of the market share in 2022.

This can be attributed to the rapidly digitizing businesses, which include cloud networks and data centers. The versatility and potential of generative AI across different sectors have driven its adoption and contributed to market growth. It is used to create realistic computer-generated graphics and special effects in movies and video games. Moreover, generative AI has transformed advertising and marketing strategies by enabling personalized and customized content creation, allowing businesses to tailor their messaging and offers to individual consumers. Besides, it is used in the healthcare sector for tasks such as medical image analysis, drug discovery, disease diagnosis, and treatment planning.

Yakov Livshits
Founder of the DevEducation project
A prolific businessman and investor, and the founder of several large companies in Israel, the USA and the UAE, Yakov’s corporation comprises over 2,000 employees all over the world. He graduated from the University of Oxford in the UK and Technion in Israel, before moving on to study complex systems science at NECSI in the USA. Yakov has a Masters in Software Development.

Generative AI Market: Forecast, Trends, and Key Players

According to the generative AI market forecast, the transformer sub-segment generated maximum revenue from 2022 to 2030 and is likely to gain significant impetus in the coming future. Transformers such as LaMDA, GPT-3, and Wu-Dao mimic cognitive attention and measure the significance of input data parts differentially. They are taught to understand the language or image, to learn classification tasks, and to generate texts or images from large datasets. As per the generative AI industry analysis, the software sub-segment gathered the maximum percentage of share in 2021 and is expected to do so in the coming years.

The Global Generative AI Market is encountering challenges regarding output imprecisions and legal entitlement. Consequently, it is essential to have human-in-the-loop safeguards in place to guide, monitor, and validate the generated content. Inaccuracies in Generative AI are referred to as hallucinations, where the model produces output that is not precise or pertinent to the original input. These inaccuracies can occur due to multiple factors such as incomplete or ambiguous input, flawed training data, or inadequate model architecture.

Furthermore, language models such as GPT-3 have been shown to be highly effective in tasks such as language translation, summarization, and text completion, and their use is expected to increase in various industries. On the other hand, the Asia-Pacific region is forecasted to be the fastest-growing segment during the forecast period. The software segment accounted for the largest revenue share of 64.8% in 2022 and is expected to continue to dominate the industry over the forecast period. The growth of the software segment can be attributed to factors, such as growing fraudulent activities, overestimation of capabilities, unexpected outcomes, and rising concerns over data privacy. Generative AI software is expected to play a significant role in various industries and sectors, including fashion, entertainment, and transportation, as it is becoming more powerful through robust ML models.

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Weightage was given to use cases identified in different regions for the market size calculation. Generative AI is a new type of AI that learns from data and creates new data based on what it learns. It’s therefore capable of creating entirely new entities in many different forms, including text, images, audio, and video. Generative AI works by using deep learning to build models from a given set of training data. Generative Adversarial Networks or GANs, accounted for over 74% of the market share in 2022. This is due to the increasing need to generate text, images, audio, and video equivalent to real data.

As the world shifts towards autonomous vehicles, the integration of generative artificial intelligence algorithms becomes crucial for enhancing the safety and efficiency of self-driving cars. Generative AI plays a pivotal role in simulating real-world scenarios, improving object recognition, and enabling advanced decision-making capabilities for autonomous vehicles. Moreover, generative AI is also revolutionizing the design and manufacturing processes in the automotive sector, enabling the creation of innovative vehicle designs, streamlined production workflows, and optimized supply chains.

  • Implementing strict regulations, ethical guidelines, and responsible AI practices are essential to mitigate potential harms and maintain the trustworthiness of generative AI applications.
  • These models have been used to create synthetic images for various purposes, including art, design, and entertainment.
  • The rising need for generative AI solutions in several sectors and the development of new and creative generative AI technologies will drive market expansion.
  • There are far more than we have captured on this page, and we are enthralled by the creative applications that founders and developers are dreaming up.
  • The rising innovation of cloud storage, thereby enabling easier access to data will also lead to an increase in the demand for generative AI.

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