The market related to artificial intelligence is projected to grow by 40% to 55% annually. The global market for AI-related products is expanding and is expected to reach $990 billion by 2027, as rapid adoption of the technology disrupts businesses and economies, according to Bain & Co.

The market, which includes services and hardware related to artificial intelligence, will grow from $185 billion last year, increasing at a rate of 40% to 55% annually, as stated in the consultancy's fifth annual global technology report published on Wednesday. This will lead to revenues of $780 to $990 billion, Bain reported.

This growth will be fueled by larger AI systems and larger data centers for their training and operation, motivated by companies and governments using the technology to increase efficiency. Demand is rising so quickly that it will strain supply chains for components, including the chips required to operate these services, Bain stated. Coupled with geopolitical tensions, this surge in sales could lead to shortages of semiconductors, personal computers, and smartphones, it warned, according to Bloomberg.

Demand for chip components, such as integrated circuit design and related IP, could increase by 30% or more by 2026, putting pressure on manufacturers, according to Bain. The cost of larger data centers could soar from $1 to $4 billion now to $10 to $25 billion in five years, as their capacity expands to more than one gigawatt from the current 50-200 megawatts, it noted.

"These changes are expected to have a huge impact on the ecosystems that support data centers, including mechanical infrastructure, power generation, and cooling," the consultancy stated in its announcement.

Companies are moving beyond the experimentation phase and are beginning to scale up productive AI across their operations, Bain said. Smaller language models, similar to the large language models that led to the creation of OpenAI's ChatGPT chatbot, but lightweight and efficient, may be preferred by businesses and countries amid concerns about cost and data privacy protection.

Countries such as Canada, France, India, Japan, and the United Arab Emirates are spending billions of dollars to subsidize dominant artificial intelligence, investing in domestic computing infrastructure and AI models created within their borders and trained on domestic data. However, establishing successful ecosystems for dominant AI will be time-consuming and costly, according to Ann Hecker, head of Bain’s global technology practice.