Artificial Intelligence (AI) has seen robust growth over a decade. AI which has a history of nearly 100 years is expected to continue its trajectory of high growth. In this article, we will look at a brief overview of AI, it’s market projection going forward and India’s planned initiative in the field of AI (as per NITI Aayog).
What is AI?
Artificial Intelligence (AI) comprises of two words – Artificial and Intelligence. Artificial, as we know, which is not real, simulated or fabricated. On the other hand, Intelligence is a broader word, which expresses terms like the ability to understand, remember, learn, deduce, be creative and solve problems and likewise.
Coming together, Artificial Intelligence is a program, assemblage of various technologies that enable the machines to sense, reason, adapt, learn, think and act with human-like intelligence to creatively and logically solve problems. These human abilities are amplified by the use of Machine Learning which is the ability to learn by experiences when faced with large data and by trial and error without any explicit instructions. The next level is the Deep Neural Network which is made of multi-layer networks that use a sophisticated mathematical model to process data in a complex way.
In 2016, the Worldwide Semi-annual Cognitive/Artificial Intelligence Systems Spending Guide from International Data Corporation (IDC) predicted the market for cognitive/AI solutions to experience a compound annual growth rate (CAGR) of 55.1 percent over the 2016-2020 forecast period to more than USD 47 billion in 2020. The same source, in a latest 2018 report, has predicted that the spending on cognitive and AI systems to reach at USD 77.6 billion in 2022, more than three times the USD 24.0 billion forecasts for 2018, at CAGR 37.3 percent for the 2017-22 period.
The major chunk of growth is attributed to software (both cognitive applications and cognitive software platforms – personal assistants, chatbots, deep learning & machine learning applications etc) which is expected to reach USD 18.2 billion in 2020 and as per new report also, the spending will witness CAGR of 43 percent between periods of 2017-22.
Sector-wise, banking, and retail will lead the revenue and spending in AI/cognitive initiatives. In the banking sector, nearly half of the amount would be spent in automated threat intelligence and prevention systems and fraud analysis & investigation while retail will thrust on product recommendations, expert shopping advisors and automated customer service agents. The next contributing sectors are discrete manufacturing, healthcare providers, and process manufacturing and education.
From a geographic perspective. North America (the US and Canada) will keep leading the growth followed by Western Europe, Japan, and China.
(Views expressed above are the personal opinion of the Prof. Krupesh Thakkar, CFA, Head of the Department – Financial Markets, ITM B-School. )