The AI infrastructure market is expected to grow from USD 23.7 billion in 2021 to USD 79.3 billion by 2026, at a CAGR of 27.3%. Increased data traffic and need for high computing power, increasing adoption of cloud machine learning platform, increasingly large and complex dataset, rising focus on parallel computing in AI data centers, and growing number of cross-industry partnerships and collaborations - are the key factors driving the AI infrastructure market.

COVID-19 Impact on the Global AI Infrastructure Market

The COVID-19 pandemic is an accelerator for AI technology, helping people around the world gets more and more comfortable with leveraging these tools for many applications, including healthcare. The adoption of remote patient monitoring, decoding genomic sequence for drug development, healthcare chatbots, and enhancement of CT scans using AI technology in diagnosis is expected to gain momentum during and after the COVID-19 pandemic.

Post-COVID-19, the manufacturing sector is expected to adopt smart manufacturing processes using AI, IoT, and blockchain technologies. Companies can reduce costs, increase process efficiency, and reduce human contact significantly by adopting these technologies. Currently, AI is being used for predictive maintenance and will further be implemented to forecast demand and returns in the supply chain.

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Cloud service providers held the largest share of end users in the AI infrastructure market in 2020

The cloud mainly addresses three areas of operation: software-as-a-service (SaaS), infrastructure-as-a-service (IaaS), and platform-as-a-service (PaaS). Some of the major cloud service providers are AWS, Microsoft, IBM, Google, and Alibaba. These are the companies that provide cloud services to most of the companies worldwide. These companies are expected to lead the overall end user market for AI infrastructure.

The number of data center providers and cloud companies is likely to increase owing to the high efficiency and economies of scale offered by cloud computing. Cloud service providers offer services to several customers from a common shared infrastructure (i.e., equipment for operations, networking, data storage, and hardware) and help companies save their IT infrastructure costs. For example, Amazon Web Services (AWS) provides it’s IaaS for training and building a statistical model for inferencing purposes.

Hybrid deployment held the largest share of AI infrastructure market in 2020

On the basis of deployment type, market has been segmented as on-premises, cloud, and hybrid. A hybrid deployment mode is mixed computing, storage, and services consisting of on-premises infrastructure, private cloud services, or a public cloud, which can be customized according to the application. Cloud services drive cost savings and support the digital business transformation. The advantage of a hybrid cloud is its increased agility; therefore, it is widely accepted by enterprises to gain a competitive advantage. The automotive, healthcare and industrial organizations started adopting a hybrid infrastructure that combines different technologies and methodologies such as virtualization, private clouds, and other internal IT resources.

Inference function to account for the largest share in the AI infrastructure market in 2021

On the basis of function, the market has been segmented into inference and training. The inference is computationally less intense than training. Unlike training, it does not include a backward pass to compute the error and update weights. It is usually a production phase wherein the model is deployed to predict the real-world data. An inference platform should enable easy integration of training into deployment systems, offer latency for demanding workloads, have scalability and a standard client interface for successful adoption.

North America is leading the market for AI infrastructure in 2020

North America accounts for the largest share of the global AI infrastructure market, and a similar trend is likely to continue in the near future. The US and Canada are expected to adopt AI-based servers at a high rate. These countries are technologically developed economies in North America owing to their strong focus on investing in R&D activities for the development of new technologies. The US is one of the leading countries in the world to adopt AI technology. In addition, the presence of prominent AI technology providers in the country, such as IBM, Google, Microsoft, NVIDIA, Intel, Facebook, MetaMind, and Amazon, is boosting the growth of the AI infrastructure market in this region.

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Key Market Players

Major players in the AI infrastructure market include Intel (US), NVIDIA (US), AMD (US), Samsung (South Korea), Xilinx (US), and so on.