Natural Language Understanding Market Report 2024

This Natural Language Understanding market report covers market characteristics, size and growth, segmentation, regional and country breakdowns, competitive landscape, market shares, trends and strategies for this market. It traces the market’s historic and forecast market growth by geography.

The natural language understanding market size has grown exponentially in recent years. It will grow from $16.34 billion in 2023 to $21.52 billion in 2024 at a compound annual growth rate (CAGR) of 31.8%. The growth observed during the historic period can be attributed to several factors such as the demand for real-time insights, advancements in healthcare diagnostics and monitoring, the rise in semantic search, integration with business intelligence tools, and the increasing availability of data.

The natural language understanding market size is expected to see exponential growth in the next few years. It will grow to $65.06 billion in 2028 at a compound annual growth rate (CAGR) of 31.9%. The anticipated growth during the forecast period can be attributed to the rapid adoption of chatbots, expanding digital transformation efforts, increasing demand for multimodal NLU, and the rise of conversational AI. Key trends expected in this period include the integration of virtual reality (VR) and augmented reality (AR), advancements in sentiment analysis, progress in neural network architectures, and the integration of the Internet of Things (IoT).

The increasing adoption of artificial intelligence (AI) is expected to drive the growth of natural language understanding in the coming years. AI refers to a wide range of technologies and algorithms that enable machines to replicate human intelligence, including tasks such as problem-solving, data-driven learning, and decision-making. The growing use of AI is driven by factors such as advances in computing power, cloud technology, access to large datasets for training algorithms, improvements in algorithm development, and increased investment in AI research and development. Natural language understanding in AI allows systems to interpret and respond to human language, improving capabilities in areas like sentiment analysis, chatbots, and automated customer service. For example, in May 2024, Eurostat, a Belgium-based governing body, reported that the percentage of large enterprises using AI technologies increased to 30.4% in 2023, up from 28.4% in 2021, reflecting significant growth in AI adoption. As a result, the expanding adoption of AI is fueling the growth of the natural language understanding market.

Key players in the NLU market are concentrating on developing data platforms with advanced large language model capabilities to gain a competitive edge. Large language models are sophisticated AI systems trained on extensive text data to understand and generate human-like language, applicable in translation, content creation, and other areas. For instance, in May 2024, International Business Machines Corporation (IBM) partnered with Salesforce Inc. to integrate IBM Watsonx AI and data platform capabilities with the Salesforce Einstein 1 Platform. This partnership aims to provide greater customer choice and flexibility in AI and data deployment, enabling businesses to build AI-powered apps with low code and enhance customer relationship management (CRM) experiences.

In July 2022, SAP SE, a Germany-based software company, acquired Askdata, a US-based provider of natural language understanding, for an undisclosed amount. This acquisition enhances SAP's capabilities in supporting organizations to make more informed decisions through AI-driven natural language searches.

Major companies operating in the natural language understanding market are Amazon Web Services Inc., Apple Inc., Google LLC, Microsoft Corporation, Meta Platforms Inc., International Business Machines Corporation, Oracle Corporation, Baidu Inc., SAS Institute Inc., OpenAI, DataBricks Inc, Teradata Corporation, Qualtrics, C3.ai Inc, H2O.ai, SoundHound Inc., Iodine Software LLC, Inbenta, Crayon Data, Haptik Inc.

North America was the largest region in the natural language understanding market in 2023. The regions covered in the natural language understanding market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.

The countries covered in the natural language understanding market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

Natural Language Understanding (NLU) is a field of artificial intelligence (AI) that focuses on enabling computers to understand and interpret human language in a meaningful and useful manner. It involves creating algorithms and models that allow machines to grasp the subtleties of language, such as syntax, semantics, context, and intent.

The natural language understanding primarily encompasses rule-based, statistical, and hybrid approaches. Rule-based systems rely on predefined linguistic rules and patterns to interpret and analyze text. These systems differ from various solutions and services, and they can be deployed in cloud-based or on-premise environments. Their applications span chatbots and virtual assistants, customer experience management, text analysis, sentiment analysis, interactive voice response (IVR) and message routing, data capture, machine translation, and other areas. These applications serve multiple industries including banking, financial services and insurance, healthcare and life sciences, retail and e-commerce, IT and IT-enabled services (IT and ITes), transportation and logistics, government and public sector, media and entertainment, manufacturing, telecommunications, and more.

The natural language understanding market research report is one of a series of new reports that provides natural language understanding market statistics, including natural language understanding industry global market size, regional shares, competitors with an natural language understanding market share, detailed natural language understanding market segments, market trends, and opportunities, and any further data you may need to thrive in the natural language understanding industry. This natural language understanding market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenario of the industry.

The natural language understanding market consists of revenues earned by entities by providing services such as language translation services, speech-to-text and text-to-speech services, and voice analytics. The market value includes the value of related goods sold by the service provider or included within the service offering. The market value includes the value of related goods sold by the service provider or included within the service offering. Only goods and services traded between entities or sold to end consumers are included.

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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