Artificial Intelligence Software as a Service (SaaS) Market Report 2025

The artificial intelligence software as a service (SaaS) market size has grown exponentially in recent years. It will grow from $251.7 billion in 2024 to $338.94 billion in 2025 at a compound annual growth rate (CAGR) of 34.7%. The growth in the historic period can be attributed to increased availability of big data, growth in cloud computing infrastructure, rising demand for predictive analytics, expansion of internet of things (iot), adoption of natural language processing (NLP)

The artificial intelligence software as a service (SaaS) market size is expected to see exponential growth in the next few years. It will grow to $1.24 trillion in 2029 at a compound annual growth rate (CAGR) of 38.3%. The growth in the forecast period can be attributed to improvements in computing power, surge in business intelligence applications, growth in edge ai applications, rise in industry-specific ai solutions, emphasis on explainable ai in saas offerings, customization and personalization of ai saas offerings. Major trends in the forecast period include evolution of deep learning techniques, development of ai-powered virtual assistants, advances in machine learning algorithms, development of industry 4 AI SaaS solutions, evolution of ai saas for continuous learning and adaptation.

The artificial intelligence software as a service (SaaS) market is set to witness growth, driven by the increasing adoption of cloud-based solutions. Cloud-based solutions provide on-demand access to configurable applications and services through the internet, eliminating the need for extensive hardware installations. Artificial intelligence SaaS providers leverage cloud infrastructure, enabling businesses to access AI capabilities via a subscription-based model. In April 2023, global end-user spending on public cloud services is expected to increase by 20.7% from 2022 to 2023, reaching £477.7 billion ($524.41 billion). The adoption of cloud-based solutions is further underscored by Eurostat's report, revealing that 41% of organizations used cloud computing services in 2021, marking a 5-percentage point increase from 2020.

The increasing number of startups is expected to drive the growth of the artificial intelligence software as a service (SaaS) market in the future. Startups are newly established companies characterized by innovation, scalability, and a focus on disrupting existing markets. These startups utilize AI SaaS for streamlined operations, cost-effective access to advanced algorithms, and accelerated development of intelligent applications, allowing them to scale quickly and remain competitive in dynamic markets. For instance, in October 2024, startup.co.uk, a UK-based entrepreneurship organization, reported that the year 2023 began with a 19.5% increase in new businesses, totaling 39,966, which marks a 6.5% rise compared to the same period in 2022. This growth is notable, especially considering the more modest 2% year-on-year increase in total incorporations last year, which reached 778,219 in 2022. Therefore, the rising number of startups is driving the growth of the artificial intelligence software as a service (SaaS) market.

Technological innovations emerge as a prominent trend in the artificial intelligence SaaS market, with major companies introducing advanced solutions to strengthen their market position. SmartSimple Software Inc., a Canada-based software firm, launched SmartSimple Cloud +AI in March 2023. This transformative software offers end-to-end AI assistance across the grant administration lifecycle, leveraging SmartSimple Cloud's robust architecture to implement AI throughout the grant process.

Companies operating in the artificial intelligence SaaS market are focusing on developing next-generation AI avatar solutions. These solutions, featuring advanced virtual entities with enhanced cognitive capabilities, simulate human interaction and provide personalized, intelligent assistance. Wizikey, an India-based SaaS provider, introduced Amara AI in July 2023, an artificial intelligence-led avatar designed to enhance data-driven reporting in public relations and streamline stakeholder alignment. This reflects the market's commitment to addressing evolving demands with innovative AI-driven solutions.

In October 2024, International Business Machines Corporation (IBM), a US-based technology company, acquired Prescinto for an undisclosed amount. With this acquisition, IBM aims to enhance its Maximo Application Suite by integrating advanced asset performance management for renewable energy, focusing on optimizing operations in the solar and wind sectors, supporting clients' sustainability goals, and strengthening IBM's leadership in the evolving energy and utility market. Prescinto is an India-based company that specializes in asset performance management (APM) software-as-a-service (SaaS) for renewable energy assets.

Major companies operating in the artificial intelligence software as a service (SaaS) market include Amazon Web Services Inc., International Business Machines Corporation, SAP SE, Salesforce Inc., NVIDIA Corp., Rockwell Automation Inc., UiPath Inc., Automation Anywhere Inc., C3.ai Inc., DataRobot Inc., H2O Innovations Inc., Blue River Technology Inc., Freenome Inc., AlphaSense Inc., Grammarly Inc., People.ai Inc., HyperScience, Rebellion Defense Inc., DataVisor Inc., Mighty AI, Vic.ai Inc., Kneron Inc., Adarga, OpenAI Inc., Clarifai Inc.

North America was the largest region in the artificial intelligence software as a service (SaaS) market in 2024. The regions covered in the artificial intelligence software as a service (saas) market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the artificial intelligence software as a service (saas) market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Italy, Spain, Canada.

Artificial Intelligence Software as a Service (SaaS) is a cloud-based service that leverages the cloud environment to provide artificial intelligence solutions, enabling individuals and businesses to explore and implement AI-based solutions with minimal initial investment and risk. This service is employed for automation, personalization, cost savings, improved decision-making, enhanced productivity, improved customer experience, and innovation.

The primary deployment types for Artificial Intelligence Software as a Service (SaaS) are cloud-based and on-premises infrastructure. Cloud-based deployment involves installing an application using various cloud-based hosting models, such as Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS). These solutions cater to organizations of various sizes, including large enterprises and small and medium enterprises (SMEs), and are utilized across diverse industry verticals such as banking, financial services, and insurance (BFSI), retail and e-commerce, healthcare, life sciences, information technology (IT) and IT-enabled services (ITeS), telecommunications, government and defense, manufacturing, energy and utilities, and others.

The artificial intelligence software as a service (SaaS) market research report is one of a series of new reports that provides artificial intelligence software as a service (SaaS) market statistics, including artificial intelligence software as a service (SaaS) industry global market size, regional shares, competitors with an artificial intelligence software as a service (SaaS) market share, detailed artificial intelligence software as a service (SaaS) market segments, market trends and opportunities, and any further data you may need to thrive in the artificial intelligence software as a service (SaaS) industry. This artificial intelligence software as a service (SaaS) market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenarios of the industry.

The artificial intelligence software as a service (SaaS) market includes revenues earned by entities by providing computer vision application programming interfaces, natural language processing (NLP), and AI-powered virtual assistants. The market value includes the value of related goods sold by the service provider or included within the service offering. The artificial intelligence SaaS market also consists of sales of tensor processing units (TPUs) and graphics processing units (GPUs). Values in this market are ‘factory gate’ values, that is the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors, and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD, unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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