Firstly what is a good 5 year CAGR for an industry? A good CAGR for an industry is 8% to 12% for large companies, while for high-risk companies, a good CAGR is between 15% to 25%. CAGR stands for Compound Annual Growth Rate, a ratio to extrapolate a constant rate of return over several years.
The Compound Annual Growth Rate (CAGR) for the AI (Artificial Intelligence) industry can vary depending on the specific segment or application within AI. AI is already experiencing significant growth across multiple sectors.
Over that past 5 years and according to various reports and market research, the global AI market has been projected to grow at a substantial CAGR over the coming years. Grand View Research in 2020 estimated that the global AI market size was valued at around $39.9 billion back in 2019 and expected to grow at a CAGR of 42.2% from 2020 to 2027. While another report by Research and Markets estimated the CAGR of the AI market to be approximately 44.9% between 2020 and 2025.
This past March, IDC and Bloomberg ramped up market estimates for artificial intelligence (hardware + services) will grow to $90 billion by 2025 – from $36 billion in 2020. While the total global artificial intelligence (AI) software market is forecast to grow around 126 billion U.S. dollars by 2025. The artificial intelligence market size is now expected to grow from >US$89 billion in 2022 to >US$407 billion by 2027, at a Compound Annual Growth Rate (CAGR) of 36.2% during the forecast period.
Note – over the past 15 years, Nasdaq 100 has delivered a CAGR of around 16%, while S&P 500 has returned about 8%
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