Conversational AI Market to Be Worth $18.4 Billion by 2026

Research firm MarketsandMarkets valued the worldwide market for conversational artificial inelligence at $6.8 billion in 2021 and expects it to reach $18.4 billion by 2026, growing at a compounded annual rate of 21.8 percent.

Conversational AI, the report said, involves three basic technologies: machine learning and deep learning, natural language processing, and automated speech recognition.

Growth, it said, is attributed to the increasing demand among enterprises to fetch critical insights from customer conversations on various platforms. The growing demand to automate communication and create personalized customer experiences is also increasing adoption of conversational AI among enterprises.

The latest generation of chatbots and voice-based agents is easier to build and deploy and is more responsive to user inquiries. Once adopted, in other words, these systems are most likely to stay, proving their value through their ease of use and affordability.

The report found higher adoption of conversational AI among verticals like financial services, insurance, media and entertainment, retail, healthcare, and life sciences. Of those, financial services firms currently hold the largest market share, though the healthcare and life sciences segment is projected to grow at the highest CAGR during the forecast period.

Based on deployment mode, the cloud segment holds the larger market share, and this is expected to continue as the cloud's benefits of easy deployment and minimal capital requirements are realized. COVID-19 is further increasing the adoption of cloud-based conversational AI solutions as lockdowns and social distancing encourage companies to move to cloud solutions that can be managed remotely.

And though larger enterprises currently hold a larger market share, small and midsized firms are projected to register a higher CAGR during the forecast period due to the growing need to enhance business processes, reach new customers, stay competitive, and control spending.

Among the leading conversational AI vendors identified in the report are Google, Microsoft, IBM, Amazon Web Services, Baidu, Oracle, and SAP.