(Singapore 9 June 2023) With the influx of consumer generative AI programs like Google’s Bard and OpenAI’s ChatGPT, the generative AI market is poised to explode, growing to $1.3 trillion over the next 10 years from a market size of just $40 billion in 2022, according to a new report by Bloomberg Intelligence (BI).

Growth could expand at a CAGR of 42%, driven by training infrastructure in the near-term and gradually shifting to inference devices for large language models (LLMs), digital ads, specialized software and services in the medium to long term, BI’s research finds.

Moreover, rising demand for generative AI products could add about $280 billion of new software revenue, driven by specialized assistants, new infrastructure products, and copilots that accelerate coding. Companies like Amazon WebServices, Microsoft, Google and Nvidia could be the biggest beneficiaries, as enterprises shift more workloads to the public cloud.

BI estimates that generative AI is poised to expand its impact from less than 1% of total IT hardware, software services, ad spending, and gaming market spending to 10% by 2032.

The largest drivers of incremental revenue will be generative AI infrastructure as a service ($247 billion by 2032) used for training LLMs, followed by digital ads driven by the technology ($192 billion) and specialized generative AI assistant software ($89 billion). On the hardware side of this, revenue will be driven by AI servers ($132 billion), AI storage ($93 billion), computer vision AI products ($61 billion) and conversational AI devices ($108 billion).

Of particular note is the potential for generative AI to benefit life sciences and education, with BI’s analysis finding that early use cases of ChatGPT suggest that these are two areas that could see rapid growth from their position as a fraction of larger software segments today. The potential for specialized AI-based software assistants may be particularly transformative for search and other means of summarizing information that drive these two market segments.

Mandeep Singh, Senior Technology Analyst at Bloomberg Intelligence and lead author of the report said, “The world is poised to see an explosion of growth in the generative AI sector over the next ten years that promises to fundamentally change the way the technology sector operates. The technology is set to become an increasingly essential part of IT spending, ad spending, and cybersecurity as it develops”.

Researchers say that AI will not be a solely positive development for all players in the space, as this rapid growth opportunity for generative AI across technology may displace a number of incumbents across that vendors set to benefit from generative AI; including semiconductors, hardware, cloud software, IT services and ad companies.